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Strategies & Market Trends : Freddie Mac (FRE) pops the housing bubble -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (20)9/30/2003 5:32:53 PM
From: KeepItSimple  Read Replies (2) | Respond to of 50
SEC accounces new Freddie Mac fraud investigation!!:

(the funny part is that some people will be surprised by this)

SEC Investigating Freddie Mac for Fraud
Tuesday September 30, 3:28 pm ET
By Susan Cornwell

WASHINGTON (Reuters) - Securities and Exchange Commission (News - Websites) Chairman William Donaldson said on Tuesday that the commission is examining possible evidence of fraud at Freddie Mac (NYSE:FRE - News), the mortgage finance company already reeling from a recent accounting scandal.

The SEC had announced back in June that it was looking into whether Freddie Mac has violated securities laws. Donaldson spoke briefly about the ongoing investigation after he was asked about it by Republican Sen. Chuck Hagel of Nebraska during a Senate Banking Committee hearing.

He noted that Freddie Mac's regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), was conducting its own investigation of accounting irregularities at Freddie Mac, and said the SEC did not have anything to do with OFHEO's investigation.

But the SEC's job was to look for fraud in the marketplace, Donaldson continued.

"What we do control, even though they (Freddie Mac) are not registered with us now, is evidences of fraud, and if there is evidence of fraud, even though they're not registered, the impact on the marketplace, we would have a role there."

"We are looking at that right now," he added. "We're in touch with them and we're in touch with any evidences of fraud that might be, or might not be."

Donaldson gave no more details on the matter.

Freddie Mac rattled markets when it replaced its top three executives in June over an accounting scandal. Six months earlier, it had announced it would restate up to three years of results to reflect higher earnings.

A Freddie Mac spokeswoman said it was not surprising that an SEC probe should include an examination of possible fraud.

"We have been meeting with them (the SEC), since actually the beginning of our restatement process, and sharing any information that they requested," said the Freddie Mac spokeswoman, Sharon McHale.

"It is no surprise that in any corporation, in the case of any major restatement, that the SEC would look into the issue of fraud, and like any other company we are subject to all the anti-fraud provisions of securities laws," she said. "We will continue to cooperate fully with the SEC as they continue their investigation."

Donaldson also said Freddie Mac has agreed to voluntary registration with the SEC. The SEC is helping the company conform with SEC registration rules, Donaldson said.

Freddie Mac has acknowledged underreporting earnings by as much as or more than $4.5 billion over three years because of accounting irregularities. An independent report commissioned by the company said executives ignored accounting rules to push earnings into the future and maintain the image of steady earnings growth.