Freddie Mac escaped a class-action lawsuit that accused the company of making misleading statements about its exposure to risky loans that resulted in the government takeover of the company, more than four years ago.
The ruling of the charges filed by the Securities and Exchange Commission against former executives at Freddie Mac and its sibling, Fannie Mae was dated on Monday, and announced by Freddie Mac on Thursday.
According to the Wall Street Journal, this might be a negative sign for the case.
The Journal reported that last year, the SEC filed charges against six former executives at the same two companies, arguing that they played down the risks of mortgages guaranteed.
The executives included former Fannie Mae Chief Executive Daniel Mudd and former Freddie Mac Chief Executive Richard Syron, who both denied the allegations.
The currently dismissed lawsuit contained similar allegations, as the case prior, Tim Rood, a former Fannie Mae executive and managing director of the Collingwood Group told the Journal.
"It's a bad precedent for the SEC and therefore good for the defendants."
The Journal confirmed that the suit on whether the company did enough to disclose the many risky loans it held or approved was filed against Freddie Mac, Mr. Syron and two other top former officers, Patricia Cook and Anthony S. Piszel.
According to the Journal, U.S. District Judge John Keenan in New York wrote, in a 34-page opinion, stating that Freddie Mac published enough data about the loans it guaranteed and its potential risks.
"It defies logic to conclude that executives who are seeking to perpetrate fraudulent information upon the market would make such fulsome disclosures," he wrote, according to the Journal.
The case filed by SEC against the two company executives is being handled in the same federal court in New York, but by a different judge, the Journal confirmed.
