The lawsuit, alleging securities fraud, was brought against Fannie in 2004 by shareholders of the mortgage finance giant. The shareholders accused Fannie and KMPG had intentionally mislead them by overstating the value of Fannie’s securities, according to a Courthouse News report.
A 2004 accounting scandal forced Fannie to restate its earnings by $6.3bn, and federal watchdogs in 2006 found the company to be engaged in risky business practices and accounting manipulation, according to a CBS report. The company was fined $400 million.
The plaintiffs in the recent lawsuit included a class of more than 1 million people who purchased or sold Fannie Mae stock options in 2008, according to Courthouse News. The $153 million settlement will be divided between them. Fannie Mae and KMPG will also have to pay $15.2 million in attorney fees to the plaintiffs’ lawyers.
A Fannie Mae official called the settlement “positive” for the company and taxpayers, according to CBS.
Fannie Mae, along with Freddie Mac, was taken into government conservancy in 2008 after nearly collapsing in the wake of the housing meltdown.
A federal judge has approved a $153 million settlement in a decade-old lawsuit against Fannie Mae and its former accountant, KPMG.