The mortgage giant Freddie Mac has now agreed to a settlement of claims against it stemming from the effect of questionable accounting on the stock holdings of employees enrolled in its 401(k) plan. As Stephen Taub nicely sums it up:

Freddie Mac agreed to pay $4.65 million to settle a class-action lawsuit brought under the Employee Retirement Income Security Act. The charges stemmed from the company’s restatement for the years 2000 through 2002.
The mortgage giant had been accused of fraudulently overstating its earnings, thus inflating the value of its shares, according to published reports. Part of the affected stock was held in employee retirement plans

More information on the settlement can be found here, here and here.
The lawsuit was “brought on behalf of past and present employees who held Freddie stock through their 401(k) retirement plans when the company disclosed billions of dollars of accounting errors and its share price sank.” The Freddie Mac action is of a type with other lawsuits claiming that ERISA was violated under these circumstances “because the people running the [401(k)] savings plan failed to give complete and accurate information to participants in the program and failed to manage the fund properly.”
Of particular note may be the applicable numbers, as the settlement calls for only a $4.65 million payment, which doesn’t seem like that high a number, given that “[a]t the end of 2002, $76.5 million of the retirement plan’s holdings — 19 percent of the total — was invested in” Freddie Mac stock, according to the plaintiffs. This may be more evidence for the idea, addressed here, that this theory of liability is increasingly no longer the road to riches for plan participants and their lawyers.