Freddie Mac Fair Fund
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Frequently Asked Questions


  1. What is this case about?
  2. Who is eligible to participate in the distribution of the Freddie Mac Fair Fund?
  3. Who is not eligible to participate in the distribution of the Freddie Mac Fair Fund?
  4. I received Freddie Mac common stock as a gift or inheritance. Am I eligible to participate in the Fair Fund?
  5. How will the Fair Fund be allocated among Eligible Claimants?
  6. Is it necessary to have suffered a loss to receive payment from the Fair Fund?
  7. How do I file a Proof of Claim Form?
  8. When is the deadline to submit a Proof of Claim Form?
  9. What documents do I need to submit in addition to the Proof of Claim Form?
  10. What is the proper date to use when listing my purchase and sale transactions?
  11. Do I need to provide all transaction and documentation requested by the Proof of Claim Form?
  12. My broker held my securities in Freddie Mac. Do I still need to submit a Proof of Claim Form?
  13. What happens after I submit my Proof of Claim Form?
  14. How much will my distribution be?
  15. When will I receive my distribution?
  16. Do I lose any rights if I submit a Proof of Claim Form?
  17. What is Gilardi & Co. LLC?

 



  1. What is this case about?

    Between 1998 and 2002, Freddie Mac, a company chartered by Congress for the purpose of providing a stable market for residential mortgage financing in the United States, engaged in fraudulent conduct that deceived investors about its true financial performance, profitability, and growth trends, and in 2000, 2001 and 2002 the Company misreported its net income in each of those years by 30.5%, 23.9% and 42.9%, respectively. Freddie Mac's senior management exerted consistent pressure to have the Company report smooth and dependable earnings growth and to present investors with the image of a company that would continue to generate predictable and growing earnings. The Company's violations were the direct result of this corporate culture that placed great emphasis on steady earnings, and a senior management that fostered a corporate image that was touted as "Steady Freddie" to the marketplace. The Company presented itself to investors as a company that consistently achieved high quality earnings growth when, in fact, the Company’s earnings were volatile and deeply impacted by changes in certain accounting rules.

    The Company’s misconduct took varied forms. First, the Company engaged in a series of transactions having principally an accounting purpose that were designed to minimize or eliminate the true impact of changes in Generally Accepted Accounting Principles (“GAAP”) – specifically SFAS 133, which introduced additional earnings volatility – and that allowed the Company to falsely portray stable earnings growth and reduced income statement volatility. Second, the Company engaged in transactions that shifted income from the current periods into future periods, thereby enabling the Company to show a smooth growth pattern in earnings, and that assisted it in meeting future projections. The Company’s public statements failed to adequately inform investors of the impact of changes in the accounting regulations and thereby concealed the significance of these transactions from investors.

    On September 27, 2007, the Securities and Exchange Commission (the “Commission” or “SEC”) filed a complaint claiming violations of the Securities Exchange Act of 1934 ("Exchange Act") and the Securities Act of 1933 ("Securities Act") by Defendant Freddie Mac, who directly or indirectly, by use of the means and instrumentalities of interstate commerce, the mails or the facilities of a national securities exchange, in connection with the purchase or sale of securities, had with knowledge or recklessly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (c) engaged in acts, practices or courses of business which operate or would operate as a fraud or deceit upon any person. The Commission further claimed violations of the Securities Act by Defendants Glenn, Clarke, Dean and Dossani for negligently, in the offer or sale of securities, by the use of the means or instruments of transportation and communication in interstate commerce or by use of the mails, directly or indirectly (a) obtaining money by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (b) engaging in transactions, practices or courses of business which operated as a fraud or deceit upon the purchasers of such securities.

    In the Final Judgments, the Defendants consented to permanent injunctions and paid disgorgement, pre-judgment interest and civil penalties to the Clerk of the Court. On September 17, 2013, the Court created a Fair Fund consisting of the funds in the Court registry accounts.

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  2. Who is eligible to participate in the distribution of the Freddie Mac Fair Fund?

    Potentially Eligible Claimants are persons or entities who purchased Freddie Mac common stock shares between April 18, 2000 and June 8, 2003, inclusive.

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  3. Who is not eligible to participate in the distribution of the Freddie Mac Fair Fund?

    Excluded from the Eligible Claimants are:

    a. Any person who served as an officer or director of Freddie Mac, or as an officer or director of any of Freddie Mac’s subsidiaries or Affiliates, from January 1, 1998 through June 3, 2003, who was directly involved in the conduct described in the Commission’s complaint;

    b. Any individual Defendant in this action, or any of Freddie Mac’s Affiliates, subsidiaries, or controlled entities directly involved in the conduct described in the Commission’s Complaint;

    c. Any employee or former employee of Freddie Mac, or any of Freddie Mac’s Affiliates, subsidiaries, or controlled entities, who has been terminated for cause in connection with the violations alleged in the Commission’s Complaint or any related Commission action, or who was otherwise terminated or resigned in connection with the violations alleged in the Complaint or any related Commission action;

    d. Any and all defendants in SEC v. Richard F. Syron, Patricia L. Cook, and Donald J. Bisenius, Civ. Action No. 11-cv-9201-RJS (S.D.N.Y.);

    e. Any defendant in any action brought by the Commission or any class action lawsuit related to the conduct described in the Commission’s complaint in this action or any related Commission action unless and until such defendant is found not liable in all such civil suits prior to the Filing Deadline, and proof of the finding(s) is included in such defendant’s timely filed Proof of Claim Form;

    f. Any Person who, as of the Filing Deadline, has been the subject of criminal charges related to the violations alleged in the Commission’s complaint in this action or any related Commission action, unless and until such defendant is found not guilty in all such criminal actions prior to the Filing Deadline, and proof of the finding(s) is included in such defendant’s timely filed Proof of Claim Form;

    g. Any Affiliates, assigns, creditors, heirs, distributees, spouses, parents, children, subsidiaries, or controlling entities of any of the foregoing Persons or entities described in Paragraph 14a - 14f above;

    h. Any Person who assigned their right to obtain a recovery in the Commission’s action against any of the Defendants; provided, however, that this provision shall not be construed to exclude those Persons who obtained such a right by gift, inheritance, devise or operation of law; or

    i. The Distribution Agent, its employees, and those persons assisting the Distribution Agent in its role as the Distribution Agent.

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  4. I received Freddie Mac common stock as a gift or inheritance. Am I eligible to participate in the Fair Fund?

    The receipt of Eligible Securities during the Eligible Trading Period by gift, inheritance, devise, transfer, operation of law or other non-cash based acquisition transactions shall not be deemed to be a purchase of Eligible Securities during the Eligible Trading Period, nor shall it be deemed an assignment of any claim relating to the purchase of such securities unless specifically so provided in the instrument of transfer, gift or assignment. However, the recipient of the Eligible Securities as a transfer, gift, inheritance, devise or operation of law shall be eligible to file a Proof of Claim Form and participate in the distribution of the Freddie Mac Fair Fund, to the extent the particular donor or decedent, as the actual purchaser of Eligible Securities, would have been eligible based upon the original purchase of such Eligible Securities within the Eligible Trading Period. Such a claim will be computed by using the date and price of the original purchase and not the date and price of the transfer. However, the donee and the donor may not both make a claim with regard to the same Eligible Securities. If both the donor and the donee make such a claim, only the claim filed by the donee will be honored. Transfers out of an account will be treated as a sale, in which the sale price will be the closing price of the Eligible Security for that day.

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  5. How will the Fair Fund be allocated among Eligible Claimants?

    The Net Available Funds shall be distributed to pay Eligible Claimants as provided under the terms of the Distribution Plan. If the Net Available Fund is greater than or equal to the aggregate Distribution Payments due Eligible Claimants, the Distribution Agent shall distribute to each Eligible Claimant his, her or its Recognized Loss. At no time shall an Eligible Claimant receive more than his, her or its Recognized Loss. If the aggregate Distribution Payments to all Eligible Claimants exceeds the Net Available Fund, the Net Available Fund shall be distributed on a pro-rata basis provided that an Eligible Claimant’s pro rata share based on their Recognized Loss entitles them to an amount equal to or greater than $20.00.

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  6. Is it necessary to have suffered a loss to receive payment from the Fair Fund?

    Yes. Distributions from the Fair Fund will occur based upon your Recognized Loss as calculated by the Court-approved Plan of Allocation. The Plan of Allocation Recognized Loss is different from any market or out-of-pocket losses you may have incurred as a result of your transactions. Please review the Distribution Plan, by clicking the Case Documents tab above, in its entirety for the Plan of Allocation. A final determination of whether you will receive a Distribution payment, and the amount, is made by the Court-appointed Distribution Agent. 

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  7. How do I file a Proof of Claim Form?

    You may have received a Distribution Plan Notice and Proof of Claim Form in the mail. If so, complete and sign the Proof of Claim Form you received and mail it, along with required supporting documentation, to the Distribution Agent.

    If you did not receive a copy of the Proof of Claim Form or you require another copy, you may request that a Proof of Claim Form packet be mailed to you by calling the Distribution Agent at (877) 401-1797 or you can download a pdf by clicking on the Case Documents tab above and selecting the Proof of Claim Form. Fill out the Proof of Claim Form completely, sign it, include copies of all required supporting documentation, and return in the enclosed envelope to:

    Freddie Mac Fair Fund
    c/o Gilardi & Co. LLC
    Distribution Agent
    P.O. Box 43452
    Providence, RI 02940-3452

    Submissions received via email will not be accepted.

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  8. When is the deadline to submit a Proof of Claim Form?

    Your Proof of Claim Form submission must be postmarked by July 10, 2017.

    Please keep a copy of your completed Proof of Claim Form submission and supporting documentation for your records. Confirmations of receipt of Proof of Claim Form submissions may not be available until after the Filing Deadline; therefore, if you require acknowledgment, please send your submission Certified Mail, Return Receipt.  

    Submissions received via email will not be accepted.

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  9. What documents do I need to submit in addition to the Proof of Claim Form?

    You should include any documentation that will support your claim. Such documents may include, but are not limited to, brokerage or investment monthly statements; trade confirmation slips; or a signed letter from your brokerage indicating you engaged in such trades. Please identify each document with your name and account number.

    Stock certificates are generally not considered an acceptable form of proof, as they do not provide the trade date and price information necessary to calculate a Recognized Loss.

    Please send photocopies as originals will not be returned. 

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  10. What is the proper date to use when listing my purchase and sale transactions?

    You should use the trade date, as opposed to the settlement date, when listing your purchase and sale transactions. If the trade date is not available, please use the date reflected in your documentation. 

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  11. Do I need to provide all transaction and documentation requested by the Proof of Claim Form?

    Yes, you must provide information all purchase and sale transactions which occurred during the Relevant Period, as well as copies of all documents to verify and support your Proof of Claim Form. Failure to provide all requested information and/or documentation may result in the disallowance and rejection of your claim. 

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  12. My broker held my securities in Freddie Mac. Do I still need to submit a Proof of Claim Form?

    Yes. If you are the underlying beneficial owner of the security, you should file a claim. If you purchased the security, but they were registered in your broker’s name, you are the underlying beneficial owner. If you are not certain of your status, please contact your broker. 

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  13. What happens after I submit my Proof of Claim Form?

    Once you submit your Proof of Claim Form, it will be processed in accordance with the Court-approved Distribution Plan. In the event that your Proof of Claim Form is found to be deficient, you will be notified with a Claims Deficiency Notice. The Notice will advise of the reason for deficiency and explain the procedure to cure such deficiency.

    Once all claims have been processed in accordance with the Distribution Plan, all timely claim submissions will receive a Determination Notice stating the Distribution Agent’s determination of the validity of the Potentially Eligible Claimant’s claim.

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  14. How much will my distribution be?

    Distribution Payments cannot be determined until processing of all claims is completed.

    However, the amount of money in the Fair Fund is not expected to be sufficient to cover the total Recognized Loss for all valid claims. Once approved, the individual Distribution Payments for valid claims will likely be pro-rated based on an individual’s, or an entity’s, Recognized Loss.

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  15. When will I receive my distribution?

    Distribution of the Fair Fund will occur once claims processing and analysis is completed and approved by the Court and/or Commission. 

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  16. Do I lose any rights if I submit a Proof of Claim Form?

    Participation in the distribution of the Freddie Mac Fair Fund will not result in the release of any rights or potential claims a claimant may have against any party (other than with respect to the Distribution Agent), including, but not limited to, any party’s past and present directors, officers, promoters, advisers, agents, Affiliates, nominees, assigns, creditors, or controlled entities. 

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  17. What is Gilardi & Co. LLC?

    Gilardi & Co. LLC is a private claims administrator that has been retained by the Securities and Exchange Commission and approved by the Court to process claims for the Freddie Mac Fair Fund. 

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