CHICAGO, June 19, 2003 (PRIMEZONE) -- Much Shelist Freed Denenberg Ament & Rubenstein, P.C. announces that it has sued Federal Home Loan Mortgage Corporation (NYSE:FRE) ("Freddie Mac" or the "Company") and certain of its officers and directors in the United States District Court for the Eastern District of Virginia. The shareholder lawsuit is on behalf of all persons and entities who purchased Freddie Mac securities between April 18, 2000 and June 6, 2003, inclusive ("Class Period").
If you wish to discuss your rights and interests, or if you have information relevant to the lawsuit, you may contact Carol V. Gilden or Michael E. Moskovitz at Much Shelist Freed Denenberg Ament & Rubenstein, P.C., by calling a toll-free number 1-800-470-6824, or by sending an e-mail to investorhelp@muchshelist.com. Your e-mail should refer to Freddie Mac.
The Complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Freddie Mac securities.
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.
If you purchased Freddie Mac securities during the Class Period and if you meet certain other legal requirements, you may file a motion in the court where the lawsuit has been filed to serve as a lead plaintiff. You must file your motion no later than July 29, 2003.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. The requirements for serving as a lead plaintiff are set forth in the Private Securities Litigation Reform Act of 1995 (15 U.S.C. Section 78u-4).
Much Shelist's history is one of experience, leadership and results. For more than 25 years, Much Shelist has represented plaintiffs in class action litigation in federal and state courts across the United States. The firm has successfully prosecuted cases involving securities fraud, antitrust violations, consumer fraud, unlawful business practices and insurance company fraud. Under Much Shelist's leadership, class members have obtained judgments and settlements in excess of $4 billion.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca