Courthouse News-
The Ohio Public Employees Retirement System failed to prove Freddie Mac concealed a $2 billion loss on risky mortgages from investors before a 2007 financial report set its stocks reeling, a federal judge ruled.
The retirement system, alternately known as OPERS, sued the Federal Home Loan Mortgage Corporation in January 2008, alleging that the government-sponsored mortgage broker lied about the number of “subprime” loans it purchased in 2006 and 2007.
Following the release of a financial statement revealing a $2 billion loss on November 20, 2007, Freddie Mac’s stock dropped 29 percent in one day, resulting in shareholder losses of over $6.6 billion.
In its complaint OPERS claimed “the drop in [stock] price ‘confirms empirically that the market was previously unaware of the full extent of Freddie Mac’s exposure to, and risk from, non-traditional mortgages,” while Freddie Mac blamed the price drop on the financial crisis.
U.S. District Court Judge Benita Y. Pearson cited several of Freddie Mac’s annual reports in her opinion, pointing out how their disclosures run counter the plaintiff’s argument.
