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The outside report on the accounting scandal at mortgage giant Fannie Mae didn’t paint a flattering picture of WilmerHale’s legal advice to the company. The report, written by former Sen. Warren Rudman and his colleagues at Paul, Weiss, Rifkind, Wharton & Garrison, concluded that there was no evidence that any of the lawyers involved “knowingly provided false information” to Fannie Mae’s board during the course of a special examination of its books by the mortgage bank’s regulator, the Office of Federal Housing Enterprise Oversight. The report does say, however, that WilmerHale’s lawyers, which included star rainmaker William McLucas, should have provided clearer information about the scope of an audit by Ernst & Young. Rudman’s team also found that management and its lawyers had taken an unnecessarily combative approach when it came to interactions with the regulator. “Management and its counsel focused unduly on OFHEO’s motives in conducting the Special Examination, which led them to dismiss the accounting issues as merely �OFHEO’s arguments’ and �disagreements,’ ” the report states. “ It turned out, of course, that management and the lawyers were wrong.” Latham & Watkins has replaced WilmerHale as lead counsel in the matter, although the firm remains involved. WilmerHale co-managing partner William Perlstein declined comment, citing the continuing investigations.
Jason McLure can be contacted at [email protected].

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