US - A retired former employee of Fremont General Corp has sought to bring a class action lawsuit against the company in order to recover "millions" of lost pension fund dollars.
According to local press reports, the retiree was suing Fremont, a Santa Monica-based mortgage lender, on the basis that management encouraged the company pension plan to buy company stock, despite knowing it was an “imprudent” investment.
It is alleged that between 1 January 2003 and 24 April 2007, while the Fremont pension plan was encouraged to buy US$150m to $210m of company shares, Fremont executives sold off $16.5m of their own holdings in the company, aware of the “unsound underwriting, risk management and lending practices”.
These “unsound” practices recently led to the company being banned by US regulators from offering subprime mortgages. The company’s shares have halved in value this year.
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