Fannie Mae and KPMG settle securities fraud class action

Posted on: May 16th, 2013 by Steve Larson
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Stocks and sharesTwo of Ohio’s largest public retirement systems are getting part of a $153 million settlement from Fannie Mae and its former auditor KPMG over claims it misled investors more than a decade ago.  The Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio served as lead plaintiffs in the classaction lawsuit accusing the companies of publicly issuing false and misleading financial reports that inflated the price of Fannie Mae’s securities.  The settlement must be approved by the U.S. District Court in Washington, D.C. 

“I am pleased to see this litigation finally resolved on behalf of the Ohio pension funds and other members of this very large class,” Ohio Attorney General Mike DeWine said in a press release. “The settlement brings closure to this matter and recovery for our Ohio pension funds and class members.”

The retirement systems will receive an undisclosed portion of the settlement, as the class of plaintiffs generally encompasses all purchasers of Fannie Mae common stock from April 2001 through December 2004, according to DeWine’s office. Fannie Mae and KPMG will each pay half of the total $153 million settlement.  The government-sponsored mortgage finance company is said to have overstated earnings by $6.3 billion along with its then-auditor, according to Bloomberg Businessweek.