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Corporations and securities brief ~ Freddie Mac settles accounting scandal

[JURIST] Leading Monday's corporations and securities law news, the Office of Federal Housing Enterprise Oversight (OFHEO) [official website] has announced that it has entered into a consent order with Freddie Mac [corporate website] over the company's multi-billion dollar accounting scandal [Forbes report]. The OFHEO, which maintains government oversight of Freddie Mac and Freddie Mae, announced the settlement in a press release and said that the settlement calls, in part, for Freddie Mac to assist the government in pursuing charges against former CEO Leland Brendsel and CFO Vaughn Clarke for their roles in the scandal. Freddie Mac agreed to a $125 million civil fine [Washington Post report] in 2003 for the accounting fraud, which took place from 2000-2002. Reuters has more.

In other corporations and securities law news...

  • The chief accountant at the Securities and Exchange Commission [official website] announced he will leave the commission next month for the private sector. Donald Nicolaisen, who joined the SEC in 2003 [SEC press release], joins former SEC Chairman William Donaldson [JURIST report] and other high-ranking officials in the agency who have left the commission in recent months. Dow Jones has more.

  • Citing a $10 million discrepancy in severance packages, the union representing Northwest's mechanics cut off talks to end the union's now 3-week-old strike [JURIST report]. In response, Northwest [corporate website] has announced its plans to hire permanent replacement mechanics. Despite allegations of serious mechanical problems [JURIST report] and Northwest's canceling its New York-Tokyo flights [Northwest press release], the airline insists that it is still operating its early fall schedule [press release] and that the replacement mechanics are safely preparing the aircraft. In a press release [PDF], the mechanics' union said that it was willing to work towards the now $203 billion in cuts the airline is asking for, but that the severance package offered by the airline for the 3181 employees who would be laid off was too short at 16 weeks. MarketWatch has more.

  • The New York Times is reporting that Oracle CEO Lawrence Ellison [Wikipedia profile] has settled a shareholder lawsuit alleging he participated in insider trading. The derivative lawsuit accused Ellison of selling $900 million of shares in Oracle before news that the company would not meet its earning target. The unusual terms of the settlement call for Ellison to donate $100 million to charities of his choice over the next 5 years, as well as paying $22 million in legal fees for the shareholders' lawyers. The settlement must still be approved by the court and Oracle's board of directors. Reuters has more.

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