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Ohio Retirement Funds Granted Lead Plaintiff Status
COLUMBUS, Ohio -- A federal judge has selected two Ohio public retirement funds -- Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio -- to lead the class of plaintiffs in pending securities fraud litigation against Fannie Mae (the Federal National Mortgage Association) and some of its executive officers, state Attorney General Jim Petro announced earlier today.Ohio is now the lead plaintiff in lawsuits against each of the nation's federally chartered mortgage lenders, Fannie Mae and Freddie Mac. Both class action suits stem from allegations of accounting irregularities that resulted in misleading earnings reports. "As lead plaintiff we will use our position to advocate for the creation of stronger corporate governance measures that will restore security and trust in the American financial system," Petro said. Judge Richard J. Leon of the U.S. District Court for the District of Columbia granted the motion of the two Ohio systems that they be named lead plaintiffs in the class action suit that claims the company allegedly issued numerous false and/or misleading statements and financial reports during the class period to create illusion that Fannie Mae was a conservative, stable and safe investment to disguise the volatility of the company's stock while awarding huge bonuses to the corporate directors and officers, Petro said. The Ohio retirement funds had filed a class action lawsuit on behalf of a class of purchasers of Fannie Mae common stock, alleging that the corporation, Chief Executive Officer Franklin D. Raines, Chief Financial Officer Timothy Howard, and certain other officers had caused Fannie Mae's publicly traded common stock to trade at artificially inflated levels. Recently, the Securities and Exchange Commission found that Fannie Mae had applied accounting methods and practices that do not comply with generally accepted accounting principles. Fannie Mae will be compelled to restate its financial statements from 2001 forward. Fannie Mae previously reported that if it were required to restate its financial statements, it might be forced to declare up to $9 billion in losses. Shortly after the SEC decision, Raines and Howard resigned and Fannie Mae terminated its outside auditors, Petro reported.The Securities and Exchange Commission is conducting a formal investigation into Fannie Mae and the Justice Department is pursuing a criminal investigation. The Office of Federal Housing Enterprise Oversight, Fannie's regulator, is also continuing its own probe of Fannie Mae. "