ATLANTA, June 16, 2003 (PRIMEZONE) -- Chitwood & Harley, LLP announces that it has filed a class action lawsuit in the United States District Court for the Eastern District of Virginia, on behalf of all persons who purchased or otherwise acquired the securities of Federal Home Loan Mortgage Corporation, ("Freddie Mac" or the "Company"), (NYSE:FRE), between April 18, 2000 and June 6, 2003, inclusive, (the "Class Period"). The suit is brought against Freddie Mac, and certain of its officers and directors. If you have questions concerning this matter or your rights, please click on Freddie Mac on our website, www.classlaw.com where a complaint is available, or email or call Jennifer Morris at jlm@classlaw.com or 1-888-873-3999 ext 6883.
The Complaint alleges that throughout the Class Period, defendants issued statements, press releases, and filed quarterly and annual reports with the SEC describing the Company's business operations and financial condition. These representations were materially false and misleading because they failed to disclose that throughout the Class Period, the Company had materially misstated its operating earnings.
During the Class Period, it has been reported that Freddie Mac may have earned more than it reported and had a higher capital surplus. This practice, called "smoothing", allows companies to meet or exceed earnings estimates and report substantial growth going forward by deferring present gains to future periods. The effect of this practice is to create the impression that earnings growth is steady and the Company meets or exceeds analysts' expectations on a regular basis. This practice is also called "cookie jar" accounting and violates Generally Accepted Accounting Principles and the SEC has pledged to stop its practice among public companies.
On June 9, 2003, before the market opened, Freddie Mac issued a press release announcing that it had fired defendant David Glenn because of "serious questions about the timeliness and completeness of his cooperation and candor with the board's audit committee counsel," that defendant Leland C. Brendsel had retired and that defendant Vaughn Clarke had resigned. The market reacted swiftly to this news, and shares of Freddie Mac closed at $50.26 on extremely heaving trading volume, down $9.61 from the close of $59.87 on June 6, 2003.
After these revelations, on June 11, 2003, numerous news sources reported that the U.S. Attorney's office for Eastern Virginia confirmed that the office was investigating Freddie Mac and that the SEC was also investigating whether Freddie Mac deferred income to smooth out results in future periods. Moreover, the SEC is reportedly investigating whether Freddie Mac's CEO and CFO certified otherwise false financial statements in violation of Sarbanes-Oxley. The full scope and contours of defendants' concerted fraud continues to be revealed.
The deadline to file lead plaintiff papers, for those class members wishing to serve in this capacity, is July 29, 2003. There are certain legal requirements to serve as lead plaintiff, which we would be happy to discuss with you. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may remain an absent class member. If you wish to discuss this action or have any questions concerning this notice or your rights with respect to this matter, please contact Jennifer Morris at 1-888-873-3999 (toll-free) or by e-mail at jlm@classlaw.com. You may also contact us through our website, www.classlaw.com, by clicking on Freddie Mac.
Chitwood & Harley LLP is a class action firm that concentrates its practice in representing victims of securities fraud and corporate mismanagement, as well as other complex litigation. Chitwood & Harley has been appointed lead counsel in major actions throughout the United States and has been instrumental in recovering billions of dollars on behalf of its clients. Clients and courts alike have praised the results achieved by Chitwood & Harley. Recently, the federal judge in In re BankAmerica Securities Litigation, which resulted in the highest recovery last year in a securities class action, commented favorably on counsel's performance stating: "Class members were well served by experienced attorneys who, through considerable time and effort, obtained a significant recovery for their clients," and, "(a)s the Court has remarked throughout this litigation, class counsel ... have performed at exceptionally high levels, and all parties have been exceedingly well represented."
For more information about Chitwood & Harley, please visit our website at www.classlaw.com or contact Jennifer Morris at 1-888-873-3999 (toll-free), by e-mail at jlm@classlaw.com or at 1230 Peachtree Street, Suite 2300, Atlanta, Georgia 30309.
More information on can be found on the Class Action Newsline at www.primezone.com/ca