Thursday, January 24, 2008

Ohio pension fund sues Freddie Mac for fraud

An Ohio pension fund filed an investor class action lawsuit against Freddie Mac, accusing the mortgage finance giant of securities fraud for failing to disclose risks from its investments in the subprime mortgage market.  Ohio Attorney General Marc Dan, who filed the suit in U.S. District Court, the Northern District of Ohio, on Tuesday said Freddie Mac had "secretly and intentionally participated in one of the largest housing investment deceptions in modern U.S. economic times."  According to Dann, the Ohio Public Employees Retirement System suffered losses of up to $27.2 million as a result of the fraud.  Attorney General Marc Dann said in a statement the company improperly bought risky home loans that fell sharply in value and led to huge losses for Freddie Mac.  Dann said Freddie Mac, a private company that holds a federal charter, was "deeply invested in the subprime mortgage industry and failed to disclose that it was not protecting itself from the billion-dollar risks it incurred."  A spokesman for Freddie Mac declined to comment.  The suit was filed on behalf of the Ohio Public Employees Retirement System and all other purchasers of Freddie Mac stock between Aug. 1, 2006, and Nov. 23, 2007. The pension fund is seeking to be the lead plaintiff in the class action suit.

More at Reuters or HERE.

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