by Blake Warenik, National Housing Conference and Center for Housing Policy
Former Fannie Mae Chairman and CEO Frank Raines saw a long-running class-action lawsuit against him dismissed last week in the U.S. District Court for the District of Columbia by Judge Richard J. Leon. Raines and other Fannie Mae executives were implicated in an accounting scandal in 2004, accused by regulators of manipulating earnings results, in part to inflate bonuses. Investors, led by two Ohio state employees’ pension funds, filed class action in 2005. In his decision, Leon wrote:
“There is not only no direct evidence that Raines intended to deceive Fannie Mae’s investors, there is no evidence that he even knew his statements were false….Additionally, plaintiffs fail to offer sufficient evidence to conclude that Raines’s statements that they specifically identify as misrepresentations are even false. Instead, plaintiffs merely carve up Raines’s statements to fit their story.”
The ruling clears Raines of civil charges of securities fraud and knowingly violating accounting standards. Read more coverage in the Wall Street Journal and in a blog piece by NHC board member Barry Zigas.