The Federal Home Loan Mortgage Corporation, or Freddie Mac, agreed to pay a $50 million penalty after the Securities and Exchange Commission charged it with securities fraud.

The SEC said Freddie Mac had improperly managed earnings as early as 1998 and lasting into 2002. The money from the settlement will go into the SEC's Fair Fund, where it will be distributed to investors.

The SEC alleged that Freddie Mac deceived investors about its true performance, profitability and growth trends. The complaint said that Freddie Mac misreported net income in 2000, 2001 and 2002 by 30.5 percent, 23.9 percent and 42.9 percent respectively. Other charges involved the use of transactions to nullify the transitional effects of the company's implementation of accounting standard SFAS 133 to account for derivative instruments and hedging activities.

Former CEO David W. Glenn agreed to pay a $250,000 civil penalty and $150,000 in disgorgement. Former CFO Vaughn A. Clarke agreed to a $125,000 civil penalty and $29,227 in disgorgement. Former senior vice president Nazir G. Dossani agreed to pay a $75,000 civil penalty and $61,663 in disgorgement. Another former senior vice president, Robert C. Dean, agreed to pay a $65,000 civil penalty and $34,658 in disgorgement.

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