SEC Escalates Probe into Freddie Mac Disclosures

The Securities and Exchange Commission has escalated its investigation into mortgage financer Freddie Mac’sdisclosures to investors and has notified at least one former official that it intends to file civil charges against him.

The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.
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The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.

Anthony “Buddy” Piszel, who was chief financial officer of Freddie Mac from 2006 until 2008 when the government placed it in conservatorship, received a “Wells notice” from the SEC, according to Corelogic, a California company where he is chief financial officer.

A Wells notice is an indication that the SEC staff intends to recommend to its five-member commission that it file civil charges.

Corelogic disclosed the Wells notice on February 10 and said Mr Piszel had submitted his resignation, but would stay until June.

Mr Piszel intends to submit a response to the SEC, the company said.

Corelogic declined further comment. Mr Piszel could not be reached. His executive assistant at Corelogic said he was not commenting. The SEC declined to comment.

In 2008, Freddie disclosed that federal prosecutors and the SEC subpoenaed it for documents relating to its accounting, disclosure and corporate governance since 2007.

The SEC is also investigating Fannie Mae, another government-sponsored mortgage financer bailed out by the federal government.

After the government took over Freddie in September 2008, Mr Piszel, Richard Syron, chairman and chief executive, and Patricia Cook, chief business officer, resigned.

David Kellermann, who replaced Mr Piszel, was found dead in 2009 in his home, from an apparent suicide.

Neither Mr Syron nor Ms Cook could be reached for comment.

The SEC sued Freddie in 2007 for allegedly engaging in earnings management from 1999 to 2002 and deceiving investors about its performance, profitability and growth trends.

Freddie paid a $50m penalty, without admitting or denying wrong- doing. Freddie recruited Mr Piszel in 2006 to help it through the alleged accounting scandal.

Additional reporting by Suzanne Kapner in New York