Former Fannie Mae (FNMA) Chief Financial Officer J. Timothy Howard was dropped from a shareholders’ securities fraud suit that claimed he hid the company’s $6.3 billion overstatement of earnings from 2001 to 2004.
U.S. District Judge Richard Leon in Washington ruled today that the shareholders failed to show Howard was aware of attempts to conceal information from the U.S. Securities and Exchange Commission or that he withheld information from Fannie Mae auditors in an attempt to deceive investors.
“Plaintiffs offer no evidence from which a reasonable juror could conclude that any of Howard’s statements concerning Fannie Mae’s accounting practices or internal controls were made with an intent to deceive, or were otherwise made without any reasonable basis,” Leon said in his 28-page opinion.
Leon’s ruling comes almost a month after he dismissed former Fannie Mae Chairman Franklin Raines, 63, from the case.
The shareholders filed suit in 2004 against Howard and Raines, along with another executive, Leanne G. Spencer, and Fannie’s auditor, KPMG. Federal investigators in 2006 accused Howard and other executives of overstating profit from 2001 to June 2004 to meet targets and trigger bonuses.
Howard, who spent 22-years working at Washington-based Fannie Mae, was chief financial officer from 1990 until December 2004. He denied the allegations.
The case is Federal National Mortgage Association Securities, Derivative and “ERISA” Litigation, 04-cv-01639, U.S. District Court, District of Columbia (Washington).
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