Freddie to Pay $410 Million

It settles some lawsuits tied to its accounting follies.
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Freddie Mac (FRE) agreed to pay $410 million to settle some lawsuits tied to its accounting follies in the years 2000-02.

The company said the deal, which settles certain securities class-action and shareholder-derivative lawsuits filed after the company's restatement of financial results, calls for corporate governance reforms under current management. Freddie didn't admit to any wrongdoing.

"Today's settlement, like the settlement announced earlier this week with the Federal Election Commission, enables this management team to resolve past issues so that we can focus squarely on meeting our important housing mission, running the business well and serving the needs of our customers," said CEO Richard F. Syron. "We are pleased with the progress we are making in moving Freddie Mac forward."

The company estimates that the settlement will reduce first-quarter 2005 net income by approximately $220 million after tax, including the application of expected insurance proceeds. This impact is in addition to other matters affecting 2005 net income, including approximately $200 million of adjustments and corrections that were discussed in the company's March 31, 2006, press release.

On Thursday, Freddie fell 61 cents to $60.52.