This article originally appeared in our affiliate, the Blog of Legal Times.
Leanne Spencer, the former controller for Fannie Mae, was dismissed from a federal securities class action filed against the mortgage giant before the financial crisis. This makes her the third former executive to win summary judgment in this case since September.
Washington, D.C., U.S District Judge Richard Leon ruled on Nov. 20 that counsel for former Fannie Mae shareholders failed to present enough evidence that Spencer acted with the intent to deceive. In a case filed in 2004, Fannie Mae is accused of manipulating earnings and violating established accounting principles; Spencer was accused of making false statements about the company’s practices and misleading investors.
“Plaintiffs’ theories on Spencer’s scienter are insufficient to withstand her summary judgment motion, particularly in light of the overwhelming evidence of Spencer’s good faith,” Leon said in this 30-page opinion.
BuckleySandler partner David Krakoff, who represents Spencer, said in a statement that the ruling ended an “eight-year nightmare” for Spencer. “The court ruled that the plaintiffs were entitled to nothing because there was no proof that Ms. Spencer had manipulated earnings or violated federal securities laws,” he said. “Today’s ruling completely vindicates Ms. Spencer of any wrongdoing.”
The plaintiffs are led by Ohio state pension plans. An attorney for the plaintiffs, W.B. Markovits of Markovits, Stock & DeMarco in Cincinnati, referred a request for comment to the Ohio attorney general’s office, where a spokesman said they don’t comment on pending litigation.
Leon wrote that while the plaintiffs “stitched together a patchwork quilt of evidence” aimed at proving Spencer’s intent, there were no witnesses who testified that Spencer intentionally misled investors.
Leon cited similar reasons last month in granting summary judgment to former Fannie Mae chairman and chief executive officer Franklin Raines and former executive vice-chairman and CFO J. Timothy Howard.
