McLean, Va. (Aug. 23, 2004) -- The Securities and Exchange Commission is considering bringing civil charges against Freddie Mac related to last year's accounting scandal at the mortgage giant, Freddie revealed.

Freddie Mac said that it received a Wells Notice from the SEC advising the company that the commission staff is considering a recommendation that the SEC bring civil charges against the McLean, Va.-based company for possible violations of federal securities laws. The SEC notice said that the commission may seek a permanent injunction and a fine against the company.

In a statement, Freddie Mac said that it has been cooperating with the SEC's investigation and "will continue to do so as we evaluate the manner in which we will respond to the receipt of the Wells Notice."

The SEC launched an investigation into Freddie Mac's accounting practices after accounting irregularities surfaced that resulted in a massive $5 billion earnings restatement and the ouster of Freddie's chief executive and other top officers.

In December, Freddie agreed, without admitting or denying any wrongdoing, to pay a $125 million fine as part of a consent decree after a report by the regulator that oversees it charged that Freddie Mac fostered "a pattern of inappropriate conduct and improper management of earnings” that led to the restatement.

-- Melissa Klein Aguilar

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

Don't have an account? Register for Free Unlimited Access