Massachusetts Pension Reserves Investment Management Board, Boston, has proposed a $170 million settlement with Fannie Mae in a class-action lawsuit against the government-sponsored enterprise, said a spokesman for the $60.7 billion pension plan.
MassPRIM and the $4 billion State-Boston Retirement Board are the two lead plaintiffs in a suit alleging that Fannie Mae and several of its former executives committed securities fraud.
The plaintiffs asserted securities fraud claims against Fannie Mae and two of its former officers on behalf of investors in Fannie Mae from 2006 to 2008. Specifically, the suit alleged the defendants made false and misleading statements concerning the company’s internal controls and its exposure to subprime and other risky mortgage loan products.
The plaintiffs further alleged Fannie Mae’s true exposure to these risky assets was revealed in a series of partial disclosures that culminated in the Sept. 7, 2008, announcement by the company’s regulator, the Federal Housing and Finance Agency, that it had placed the company into conservatorship.
Joseph Grassi, senior vice president, interim general counsel and corporate secretary at Fannie Mae, issued the following statement regarding MassPRIM’s proposed settlement: "We are pleased to put this matter behind us. This is another sign of progress as Fannie Mae continues our focus on serving the market and helping lenders make mortgage credit available to qualified borrowers."
The proposed settlement is still subject to court approval.