Former Fannie Mae chief executive Franklin D. Raines and former chief financial officer J. Timothy Howard have requested the dismissal of a shareholder lawsuit against them.
Lawyers for the two men have filed motions claiming that the plaintiffs have not produced any direct evidence that either Raines or Howard knew about the company's accounting problems that could result in changes to as much as $10.8 billion in reported earnings.
The men have also been accused of profiting from the accounting violations when they sold a combined $20 million worth of Fannie Mae stock, which the defendants have said represented less than 5 percent of each executive's holdings.
The case has resulted in ongoing investigations by both the Securities and Exchange Commission and federal prosecutors, as well as an independent probe by Fannie Mae and considerations by Congress that could lead to tighter regulation of the company and mortgage lender Freddie Mac.The government-chartered Fannie Mae makes its money on the difference between the mortgage returns they buy from lenders and their financing costs. Fannie Mae has said that accounting errors from 2002 through 2004 could require it to restate $8.4 billion in earnings, though cumulative losses for the years 2001 through 2004 could be as high as $10.8 billion dollars.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access