Judge Frees Goldman from Fannie Suit

Fannie Mae investors had reportedly charged that Goldman enabled the mortgage company to shift more than $107 million in earnings into future years without properly informing shareholders.

A federal judge ruled that Fannie Mae shareholders cannot include Goldman Sachs in their lawsuit stemming from the mortgage giant’s accounting scandal, according to the Associated Press.

Investors who lost money they spent on Fannie Mae shares had asserted that Goldman constructed deals that enabled the mortgage company to shift more than $107 million in earnings into future years without properly informing investors, the wire service added.

In his ruling, U.S. District Judge Richard J. Leon said, however, that there’s no evidence that Goldman prepared any of Fannie’s misleading financial statements or knew about them in advance, according to the AP. Earlier, Goldman was dropped as a defendant in a shareholders derivative lawsuit, the wire service reported.

The complaint in the just-decided case accused Goldman of furthering Fannie’s fraudulent scheme through two Real Estate Mortgage Investment Conduit (REMIC) transactions “for the sole economic and improper purpose of shifting $107 million of Fannie Mae’s earnings into future periods,” according to the co-lead counsel, the law firm of Berman, DeValerio, Pease, Tabacco, Burt & Pucillo. REMICs are mortgage pools that have been broken apart and sold to fixed-income investors as individual securities.

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