Kuriakose v. Fed. Home Loan Mortgage Corp., No. 08 Civ. 7281 (S.D.N.Y. Mar. 30, 2011) (Keenan, J.)

Investors in Freddie Mac brought this putative class action against Freddie Mac and a number of its former officers under Section 10(b) of the ’34 Act, alleging misrepresentations concerning the company’s exposure to risky mortgage products, the sufficiency of its capital, and the accuracy of its financial reporting. Judge Keenan of the Southern District of New York dismissed the complaint with leave to replead, holding that: (1) with respect to trends in the subprime market, Freddie Mac in fact made fairly full disclosures; (2) with respect to statements regarding adequate capitalization, plaintiffs did not adequately plead scienter; and (3) with respect to allegations that Freddie Mac failed to disclose internal control and underwriting issues, plaintiffs failed to plead specific factual allegations. Decision.