Document:

exv10w65

 

    Exhibit
    10.65

 

    UNITED
    STATES DISTRICT COURT

    FOR THE DISTRICT OF COLUMBIA

 

 

    SECURITIES
    AND EXCHANGE

    COMMISSION,

    100 F St., NE

    Washington, D.C. 20549,

 

    Plaintiff,

 

    v.

 

    FEDERAL HOME LOAN MORTGAGE

      CORPORATION,

    DAVID W. GLENN,

    VAUGHN A. CLARKE,

    ROBERT C. DEAN, and

    NAZIR G. DOSSANI,

 

    Defendants.

 

    CONSENT
    OF DEFENDANT FEDERAL HOME LOAN MORTGAGE
    CORPORATION

 

    1. Defendant Federal Home Loan Mortgage Corporation
    (“Defendant”) waives service of a summons and the
    Complaint in this action, enters a general appearance, and
    admits the Court’s jurisdiction over Defendant and over the
    subject matter of this action.

 

    2. Without admitting or denying the allegations of the
    Complaint (except as to personal and subject matter
    jurisdiction, which Defendant admits), Defendant hereby consents
    to the entry of the final Judgment in the form attached hereto
    (the “Final Judgment”) and incorporated by reference
    herein, which, among other things:

 

			
	 	    (a) 
	
    permanently restrains and enjoins Defendant from violation of
    Section 10(b) of the Securities Exchange Act of 1934
    (“Exchange Act”) [15

    

    1

 

    U.S.C. §§ 78j(b)], and Rule
    10b-5
    [17 C.F.R.
    § 240.10b-5]
    promulgated thereunder, and
    Section 17(a)
    of the Securities Act of 1933 (“Securities Act”)
    [15 U.S.C.
    §§ 77q(a)]; and

 

			
	 	    (b) 
	
    orders Defendant to pay disgorgement of $1, and a civil penalty
    in the amount of $50,000,000 pursuant to Section 20(d) of
    the Securities Act [15 U.S.C. § 77t(d)] and
    Section 21(d)(3)
    of the Exchange Act [15 U.S.C.
    § 78u(d)(3)].

 

    3. Defendant acknowledges that the civil penalty paid
    pursuant to the Final Judgment may be distributed pursuant to
    the Fair Fund provisions of Section 308(a) of the
    Sarbanes-Oxley Act of 2002. Regardless of whether any such Fair
    Fund distribution is made, the civil penalty shall be treated as
    a penalty paid to the government for all purposes, including all
    tax purposes. To preserve the deterrent effect of the civil
    penalty, Defendant agrees that it shall not, after offset or
    reduction of any award of compensatory damages in any Related
    Investor Action based on Defendant’s payment of
    disgorgement in this action, argue that it is entitled to, nor
    shall it further benefit by, offset or reduction of such
    compensatory damages award by the amount of any part of
    Defendant’s payment of a civil penalty in this action
    (“Penalty Offset”). If the court in any Related
    Investor Action grants such a Penalty Offset, Defendant agrees
    that it shall, within 30 days after entry of a final order
    granting the Penalty Offset, notify the Commission’s
    counsel in this action and pay the amount of the Penalty Offset
    to the United States Treasury or to a Fair Fund, as the
    Commission directs. Such a payment shall not be deemed an
    additional civil penalty and shall not be deemed to change the
    amount of the civil penalty imposed in this action. For purposes
    of this paragraph, a “Related Investor Action”

    

    2

 

    means a private damages action brought against Defendant by or
    on behalf of one or more investors based on substantially the
    same facts as alleged in the Complaint in this action.

 

    4. Defendant agrees that it shall not seek or accept,
    directly or indirectly, reimbursement or indemnification from
    any source, including but not limited to payment made pursuant
    to any insurance policy, with regard to any civil penalty
    amounts that Defendant pays pursuant to the Final Judgment,
    regardless of whether such penalty amounts or any part thereof
    are added to a distribution fund or otherwise used for the
    benefit of investors. Defendant further agrees that it shall not
    claim, assert, or apply for a tax deduction or tax credit with
    regard to any federal, state, or local tax for any penalty
    amounts that Defendant pays pursuant to the Final Judgment,
    regardless of whether such penalty amounts or any part thereof
    are added to a distribution fund or otherwise used for the
    benefit of investors.

 

    5. Defendant waives the entry of findings of fact and
    conclusions of law pursuant to Rule 52 of the Federal Rules
    of Civil Procedure.

 

    6. Defendant waives the right, if any, to a jury trial and
    to appeal from the entry of the Final Judgment.

 

    7. Defendant enters into this Consent voluntarily and
    represents that no threats, offers, promises, or inducements of
    any kind have been made by the Commission or any member,
    officer, employee, agent, or representative of the Commission to
    induce Defendant to enter into this Consent.

 

    8. Defendant agrees that this Consent shall be incorporated
    into the Final Judgment with the same force and effect as if
    fully set forth therein.

    

    3

 

    9. Defendant will not oppose the enforcement of the Final
    Judgment on the ground, if any exists, that it fails to comply
    with Rule 65(d) of the Federal Rules of Civil Procedure,
    and hereby waives any objection based thereon.

 

    10. Defendant waives service of the Final Judgment and
    agrees that entry of the Final Judgment by the Court and filing
    with the Clerk of the Court will constitute notice to Defendant
    of its terms and conditions. Defendant further agrees to provide
    counsel for the Commission, within thirty days after the Final
    Judgment is filed with the Clerk of the Court, with an affidavit
    or declaration stating that Defendant has received and read a
    copy of the Final Judgment.

 

    11. Consistent with 17 C.F.R. 202.5(f), this
    Consent resolves only the claims asserted against Defendant in
    this civil proceeding. Defendant acknowledges that no promise or
    representation has been made by the Commission or any member,
    officer, employee, agent, or representative of the Commission
    with regard to any criminal liability that may have arisen or
    may arise from the facts underlying this action or immunity from
    any such criminal liability. Defendant waives any claim of
    Double Jeopardy based upon the settlement of this proceeding,
    including the imposition of any remedy or civil penalty herein.
    Defendant further acknowledges that the Court’s entry of a
    permanent injunction may have collateral consequences under
    federal or state law and the rules and regulations of
    self-regulatory organizations, licensing boards, and other
    regulatory organizations. Such collateral consequences include,
    but are not limited to, a statutory disqualification with
    respect to membership or participation in, or association with a
    member of, a self-regulatory organization. This statutory
    disqualification has consequences that are separate from any
    sanction imposed in an administrative proceeding.

 

    12. Defendant understands and agrees to comply with the
    Commission’s policy “not to permit a defendant or
    respondent to consent to a judgment or order that imposes a
    sanction

    

    4

 

    while denying the allegation in the complaint or order for
    proceedings.” 17 C.F.R. § 202.5. In
    compliance with this policy, Defendant agrees: (i) not to
    take any action or to make or permit to be made any public
    statement denying, directly or indirectly, any allegation in the
    Complaint or creating the impression that the Complaint is
    without factual basis; and (ii) that upon the filing of
    this Consent, Defendant hereby withdraws any papers filed in
    this action to the extent that they deny any allegation in the
    Complaint. If Defendant breaches this agreement, the Commission
    may petition the Court to vacate the Final Judgment and restore
    this action to its active docket. Nothing in this paragraph
    affects Defendant’s: (i) testimonial obligations; or
    (ii) right to take legal or factual positions in litigation
    or other legal proceedings in which the Commission is not a
    party.

 

    13. Defendant hereby waives any rights under the Equal
    Access to Justice Act, the Small Business Regulatory Enforcement
    Fairness Act of 1996, or any other provision of law to seek from
    the United States, or any agency, or any official of the United
    States acting in his or her official capacity, directly or
    indirectly, reimbursement of attorney’s fees or other fees,
    expenses, or costs expended by Defendant to defend against this
    action. For these purposes, Defendant agrees that Defendant is
    not the prevailing party in this action since the parties have
    reached a good faith settlement.

 

    14. In connection with this action and any related judicial
    or administrative proceeding or investigation commenced by the
    Commission or to which the Commission is a party. Defendant
    (i) agrees to make available its employees and agents to
    appear and be interviewed by Commission staff at such times and
    places as the staff requests upon reasonable notice;
    (ii) will accept service by mail or facsimile transmission
    of notices or subpoenas issued by the Commission for documents
    or testimony at depositions, hearings, or trials, or in

    

    5

 

    connection with any related investigation by Commission staff;
    (iii) appoints Defendant’s undersigned attorney as
    agent to receive service of such notices and subpoenas;
    (iv) with respect to such notices and subpoenas, waives the
    territorial limits on service contained in Rule 45 of the
    Federal Rules of Civil Procedure and any applicable local rules,
    provided that the party requesting the testimony reimburses
    Defendant’s travel, lodging, and subsistence expenses at
    the
    then-prevailing
    U.S. Government per diem rates; and (v) consents to
    personal jurisdiction over Defendant in any United States
    District Court for purposes of enforcing any such subpoena.

 

    15. Defendant agrees that the Commission may present the
    Final Judgment to the Court for signature and entry without
    further notice.

    

    6

 

    16. Defendant agrees that this Court shall retain
    jurisdiction over this matter for the purpose of enforcing the
    terms of the Final Judgment.

 

	 	 	 
	
 
	
 
	
    Federal Home Loan Mortgage Corporation

	
 
	
 
	
 

	

    Dated:   September 18, 2007

    

	
 
	

    By:   /s/  Robert
    Bostrom

    

 

    Commonwealth
    of Virginia, County of Fairfax
    

 

    On September 18, 2007, Robert Bostrom, a person known to
    me, personally appeared before me and acknowledged executing the
    foregoing Consent with full authority to do so on behalf of
    Federal Home Loan Mortgage Corporation as its Executive Vice
    President and General Counsel.

 

    /s/  Linda
    Pitts

    Notary Public

    Commission expires: November 30, 2007

    Notary Registration Number: 180186

 

    Approved as
    to form:
    

 

    /s/  Hyacinth
    Kucik

    Hyacinth Kucik, Esq.

    Vice President and Deputy General
    Counsel — Litigation

    Federal Home Loan Mortgage Corporation

    

    7

 

    UNITED
    STATES DISTRICT COURT

    FOR THE DISTRICT OF COLUMBIA

 

 

    SECURITIES
    AND EXCHANGE

    COMMISSION,

    100 F St., NE

    Washington, D.C. 20549,

 

    Plaintiff,

 

    v.

 

    FEDERAL HOME LOAN MORTGAGE

      CORPORATION,

    DAVID W. GLENN,

    VAUGHN A. CLARKE,

    ROBERT C. DEAN, and

    NAZIR G. DOSSANI,

 

    Defendants.

 

    FINAL
    JUDGMENT AS TO

    DEFENDANT FEDERAL HOME LOAN MORTGAGE
    CORPORATION

 

    The Securities and Exchange Commission (“Commission”)
    having filed a Complaint and Defendant Federal Home Loan
    Mortgage Corporation having entered a general appearance;
    consented to the Court’s jurisdiction over Defendant and
    the subject matter of this action; consented to entry of this
    Final Judgment without admitting or denying the allegations of
    the Complaint (except as to jurisdiction); waived findings of
    fact and conclusions of law; and waived any right to appeal from
    this Final Judgment:

    

    8

 

    I.

 

    IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that
    Defendant and Defendant’s agents, servants, employees,
    attorneys, and all persons in active concert or participation
    with them who receive actual notice of this Final Judgment by
    personal service or otherwise are permanently restrained and
    enjoined from violating, directly or indirectly,
    Section 10(b) of the Securities Exchange Act of 1934
    (“Exchange Act”) [15 U.S.C.
    § 78j(b)]
    and
    Ru1e 10b-5
    promulgated thereunder [17 C.F.R.
    § 240.10b-5],
    by using any means or instrumentality of interstate commerce, or
    of the mails, or of any facility of any national securities
    exchange, in connection with the purchase or sale of any
    security:

 

			
	 	    (a) 
	
    to employ any device, scheme, or artifice to defraud;

	 
	 	    (b) 
	
    to make any untrue statement of a material fact or to omit to
    state a material fact necessary in order to make the statements
    made, in light of the circumstances under which they were made,
    not misleading; or

	 
	 	    (c) 
	
    to engage in any act, practice, or course of business which
    operates or would operate as a fraud or deceit upon any person.

 

    II.

 

    IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
    Defendant and Defendant’s agents, servants, employees,
    attorneys, and all persons in active concert or participation
    with them who receive actual notice of this Final Judgment by
    personal service or otherwise are permanently restrained and
    enjoined from violating Section 17(a) of the Securities Act
    of 1933 [15 U.S.C.
    § 77q(a)]
    in the offer or sale of any security by the use of any means or
    instruments of transportation or communication in interstate
    commerce or by use of the mails, directly or indirectly:

    

    9

 

			
	 	    (a) 
	
    to employ any device, scheme, or artifice to defraud;

	 
	 	    (b) 
	
    to obtain money or property by means of any untrue statement of
    a material fact or any omission of a material fact necessary in
    order to make the statements made, in light of the circumstances
    under which they were made, not misleading;

 

    or

 

			
	 	    (c) 
	
    to engage in any transaction, practice, or course of business
    which operates or would operate as a fraud or deceit upon the
    purchaser.

 

    III.

 

    IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
    Defendant is liable for disgorgement of $1, and a civil penalty
    in the amount of $50,000,000.00 (fifty million) pursuant to
    Section 20(d) of the Securities Act [15 U.S.C.
    § 77t(d)] and
    Section 21(d)(3)
    of the Exchange Act [15 U.S.C.
    § 78u(d)(3)].
    Defendant shall satisfy this obligation by paying $50,000,001.00
    within ten business days to the Clerk of this Court, together
    with a cover letter identifying Federal Home Loan Mortgage
    Corporation as a defendant in this action; setting forth the
    title and civil action number of this action and the name of
    this Court; and specifying that payment is made pursuant to this
    Final Judgment. Defendant shall simultaneously transmit
    photocopies of such payment and letter to the Commission’s
    counsel in this action. By making this payment, Defendant
    relinquishes all legal and equitable right, title, and interest
    in such funds, and no part of the funds shall be returned to
    Defendant. Defendant shall pay post-judgment interest on any
    delinquent amounts pursuant to 28 USC § 1961.

 

    The Clerk shall deposit the funds into an interest bearing
    account with the Court Registry Investment System
    (“CRIS”) or any other type of interest bearing account
    that is utilized by the Court. These funds, together with any
    interest and income earned thereon (collectively, the

    

    10

 

    “Fund”), shall be held in the interest bearing account
    until further order of the Court. In accordance with
    28 U.S.C. § 1914 and the guidelines set by the
    Director of the Administrative Office of the United States
    Courts, the Clerk is directed, without further order of this
    Court, to deduct from the income earned on the money in the Fund
    a fee equal to ten percent of the income earned on the Fund.
    Such fee shall not exceed that authorized by the Judicial
    Conference of the United States.

 

    The Commission may by motion propose a plan to distribute the
    Fund subject to the Court’s approval. Such a plan may
    provide that Fund shall be distributed pursuant to the Fair Fund
    provisions of
    Section 308(a)
    of the Sarbanes-Oxley Act of 2002. Regardless of whether any
    such Fair Fund distribution is made, amounts ordered to be paid
    as civil penalties pursuant to this Judgment shall be treated as
    penalties paid to the government for all purposes, including all
    tax purposes. To preserve the deterrent effect of the civil
    penalty, Defendant shall not, after offset or reduction of any
    award of compensatory damages in any Related Investor Action
    based on Defendant’s payment of disgorgement in this
    action, argue that it is entitled to, nor shall it further
    benefit by, offset or reduction of such compensatory damages
    award by the amount of any part of Defendant’s payment of a
    civil penalty in this action (“Penalty Offset”). If
    the court in any Related Investor Action grants such a Penalty
    Offset, Defendant shall, within 30 days after entry of a
    final order granting the Penalty Offset, notify the
    Commission’s counsel in this action and pay the amount of
    the Penalty Offset to the United States Treasury or to a Fair
    Fund, as the Commission directs. Such a payment shall not be
    deemed an additional civil penalty and shall not be deemed to
    change the amount of the civil penalty imposed in this Judgment.
    For purposes of this paragraph, a “Related Investor
    Action” means a private damages action brought

    

    11

 

    against Defendant by or on behalf of one or more investors based
    on substantially the same facts

 

    as alleged in the Complaint in this action.

 

    IV.

 

    IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the
    Consent is incorporated herein with the same force and effect as
    if fully set forth herein, and that Defendant shall comply with
    all of the undertakings and agreements set forth therein.

 

    V.

 

    IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this
    Court shall retain jurisdiction of this matter for the purposes
    of enforcing the terms of this Final Judgment.

 

    VI.

 

    There being no just reason for delay, pursuant to
    Rule 54(b) of the Federal Rules of Civil Procedure, the
    Clerk is ordered to enter this Final Judgment forthwith and
    without further notice.

 

    Dated: ­
    ­,
    ­
    ­
    

 

    UNITED STATES DISTRICT JUDGE

    

    12exv10w66

 

    Exhibit 10.66

 

    United
    States of America

    Office of Federal Housing Enterprise Oversight

 

    In the
    Matter of

    THE FEDERAL HOME LOAN MORTGAGE CORPORATION (“FREDDIE
    MAC”)

    December 9, 2003
    

 

    STIPULATION
    AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER

 

    The Director of the Office of Federal Housing Enterprise
    Oversight (“OFHEO”) has determined to initiate cease
    and desist proceedings and has determined to impose a civil
    money penalty against the Federal Home Loan Mortgage Corporation
    (“Freddie Mac” or “Enterprise”) pursuant to
    12 U.S.C. § 4631 and 12 U.S.C.
    § 4636.

 

    The Enterprise, in the interest of compliance and cooperation,
    consents to the issuance of a Consent Order, dated
    December 9, 2003 (“Order”), before the filing of
    any notice and before the finding of any issues of fact or law.

 

    In consideration of the above premises, the Director and the
    Enterprise, through its duly authorized representative, hereby
    stipulate and agree to the following:

 

    ARTICLE I

 

    Jurisdiction

 

    (1) The Enterprise is a corporation chartered pursuant to
    the Federal Home Loan Mortgage Corporation Act of 1970,
    12 U.S.C. §§ 1451 to 1459, and subject to
    supervision and regulation by OFHEO pursuant to the Federal
    Housing Enterprises Financial Safety and Soundness Act of 1992,
    12 U.S.C. §§ 4501 et seq.

 

    ARTICLE II

 

    Agreement

 

    (2) The Enterprise hereby consents and agrees to the
    issuance of the Order by the Director. In so doing, the
    Enterprise neither admits nor denies any wrongdoing or any
    asserted or implied finding or other basis for the Order. The

 

    Enterprise further consents and agrees that said Order shall
    become effective upon its issuance and shall be fully
    enforceable by OFHEO under the provisions of 12 U.S.C.
    §§ 4635 and 4636.

 

    ARTICLE III

 

    Waivers

 

    (3) The Enterprise, by signing this Stipulation and
    Consent, hereby waives:

 

    (a) the issuance of a Notice of Charges pursuant to
    12 U.S.C. § 4631(c)(1);

 

    (b) written notice of the Director’s determination to
    impose a penalty on the record pursuant to
    12 U.S.C. § 4636(c)(1)(A);

 

    (c) any and all procedural rights available in connection
    with the issuance of the Order;

 

    (d) all rights to seek any type of administrative or
    judicial review of the Order; and

 

    (e) any and all rights to challenge or contest the validity
    of the Order.

 

    ARTICLE IV

 

    Other
    Action

 

    (4) The Enterprise agrees that the provisions of this
    Stipulation and Consent shall not inhibit, estop, bar, or
    otherwise prevent the Director from taking any other action
    affecting the Enterprise in connection with OFHEO’s ongoing
    regulatory oversight of the Enterprise with respect to matters
    occurring subsequent to the date of the Order or with respect to
    matters relating to third parties not affiliated with the
    Enterprise (including separated senior officers of the
    Enterprise) if, at any time, the

 

    Director deems it appropriate to do so to fulfill the
    responsibilities placed upon him by the several laws of the
    United States of America.

 

    (5) The Enterprise agrees that the provisions of this
    Stipulation and Consent shall not be construed to limit or
    otherwise affect regulatory actions by other federal regulatory
    agencies.

 

    IN TESTIMONY WHEREOF, the undersigned, the Director of OFHEO,
    has hereunto set his hand on behalf of himself and OFHEO.

 

		
	    /s/  Armando
    Falcon,
    Jr.

    	     DATED:
    December 9, 2003
    

    Armando Falcon, Jr.

    Director, Officer of Federal Housing Enterprise Oversight

 

 

    IN TESTIMONY WHEREOF, the undersigned, as the duly authorized
    representative of the Enterprise, has hereunto set his hand on
    behalf of the Enterprise.

 

		
	    /s/  Shaun
    F.
    O’Malley

    	     DATED:
    December 9, 2003
    

    Shaun F. O’Malley

    Chairman of the Board of Directors

    Federal Home Loan Mortgage Corporation (“Freddie Mac”)

 

 

    United
    States of America

    Office of Federal Housing Enterprise Oversight

 

    Order
    No. 2003-02

 

    In the
    Matter of

    The Federal Home Loan Mortgage Corporation

 

    Consent
    Order

 

    Whereas, the Director of the Office of Federal Housing
    Enterprise Oversight (“OFHEO”) has determined to
    initiate cease and desist proceedings against the Federal Home
    Loan Mortgage Corporation (“Freddie Mac” or
    “Enterprise”) pursuant to 12 USC § 4631.

 

    Whereas, the Director has determined to initiate such
    proceedings based on his view that Freddie Mac engaged in
    conduct that does not conform with the Federal Housing
    Enterprises Financial Safety and Soundness Act of 1992
    (“Safety and Soundness Act”), OFHEO rules, guidances
    and standards, and the Federal Home Loan Mortgage Corporation
    Act and that such conduct has resulted in harm to the Enterprise;

 

    Whereas, the Director believes that the conduct involved
    provides sufficient grounds to initiate administrative or
    enforcement proceedings against the Enterprise, including a
    claim for the award of civil money penalties and other relief;

 

    Whereas, the Enterprise has executed a “Stipulation and
    Consent to the Issuance of a Consent Order,” dated
    December 9, 2003, that is accepted by the Director, and by
    such Stipulation and Consent the Enterprise has consented to the
    issuance of this Consent Order (“the Order”) by the
    Director.

 

    Whereas the Director believes that it would be in the public
    interest to enter into this Consent Order with the Enterprise,

 

 

    Therefore, the Director, pursuant to the authority vested in him
    by the Safety and Soundness Act, 12 U.S.C.
    §§ 4631 and 4636, hereby orders that:

 

    Article I     Cooperation
    

 

    1. The Enterprise shall use good faith reasonable efforts
    to cooperate with OFHEO in OFHEO’s pursuit of
    administrative or enforcement proceedings with respect to other
    persons, including, upon reasonable prior notice and at
    reasonable times and places, in making Enterprise’s
    documents and records relating to such proceeding available to
    OFHEO without subpoena (subject to any privilege or other
    protection available under applicable law), and, upon reasonable
    prior notice and at reasonable times and places, in making the
    Enterprise’s personnel (including officers, directors and
    employees) available for interview and/or testimony without
    subpoena (subject to any privilege or other protection available
    under applicable law), provided that the duty to
    cooperate under this paragraph shall not require cooperation
    between the Enterprise and OFHEO in respect of claims or
    proceedings making any allegation that would, if proven,
    adversely affect the Enterprise, as determined by the Enterprise.

 

    2. The Enterprise shall use good faith reasonable efforts
    to cooperate with OFHEO in OFHEO’s pursuit of litigation
    with respect to other persons or in litigation involving other
    persons, including, upon reasonable prior notice and at
    reasonable times and places, in making the Enterprise’s
    documents and records relating to such litigation available to
    OFHEO without subpoena (subject to any privilege or other
    protection available under applicable law), and, upon reasonable
    prior notice and at reasonable times and places, in making the
    Enterprise’s personnel (including officers, directors and
    employees) available for interview and/or testimony without
    subpoena (subject to any privilege or other protection available
    under applicable law), provided that the duty to
    cooperate under this paragraph shall not require cooperation
    between the Enterprise and OFHEO in respect of claims or
    proceedings making any allegation that would, if proven,
    adversely affect the Enterprise, as determined by the Enterprise.

    

    2

 

    Article II     Board
    of Directors and Senior Management
    

 

    3. Within 120 days from the date of this Order, the
    Board shall cause to be conducted a review of the
    Enterprise’s bylaws in light of the factors contributing to
    the restatement and revision of the Enterprise’s financial
    statements for 2000, 2001 and 2002. Based on this review, the
    Board shall cause such revisions to be made in the
    Enterprise’s bylaws as the Board determines to be
    appropriate.

 

    The Enterprise shall report to OFHEO on the results of the
    review and on any revisions to be made to the Enterprise’s
    bylaws.

 

    4. Within 120 days From the date of this Order, the
    Board shall cause to be conducted a review of the
    Enterprise’s codes of conduct for the Board and for
    employees in light of the factors contributing to the
    restatement and revision of the Enterprise’s financial
    statements for 2000, 2001 and 2002, and shall cause such
    revisions to be made in those codes of conduct as the Board
    determines to be appropriate and such employee training programs
    to be developed and implemented as the Board determines to be
    appropriate.

 

    Enterprise shall report to OFHEO on the results of the review of
    the Enterprise’s codes of conduct for the Board and
    employees, on any revisions to be made in such codes of conduct
    and on any employee training programs to be developed and
    implemented.

 

    In addition, for the first 24 months following the
    implementation of any employee training programs pursuant to
    this paragraph, the Enterprise shall submit to OFHEO at the end
    of each six-month period a report on the implementation of such
    training programs by the Enterprise.

 

    5. Within 180 days from the date of this Order, the
    Board shall cause to be prepared a succession plan for the
    Enterprise’s senior management. The Board shall consult
    with OFHEO in preparing this succession plan, and shall submit a
    copy of this succession

    

    3

 

    plan to OFHEO. (For purposes of this paragraph, senior
    management means the Enterprise’s chief executive officer,
    chief operating officer, chief financial officer and general
    counsel, and the heads of the Investment & Capital
    Markets Division and the Mortgage Sourcing,
    Operations & Funding Division.)

 

    6. Within 120 days from the date of this Order, the
    Board shall cause to be conducted a review of its committee
    structure and shall determine what changes, if any, are
    appropriate to make in such committee structure. This review
    shall take into account the need for effective Board oversight
    of essential Enterprise functions, including management
    implementation of internal controls and operational risk
    planning. The Board shall report to OFHEO any changes it
    determines to make in its committee structure as a result of
    this review.

 

    7. Within 150 days from the date of this Order, the
    Board shall cause to be reviewed the frequency of regular Board
    meetings, the Board’s process (including the amount of time
    allotted) for full Board consideration of Board committee
    reports, and the Board’s processes for obtaining
    information from management with respect to both the
    Enterprise’s ongoing operations and issues of special
    importance to the Enterprise.

 

    Based on this review, the Board shall determine what revisions,
    if any, are appropriate to make in the frequency of regular
    Board meetings, in the Board’s process (including the
    amount of time allotted) for full Board consideration of Board
    committee reports, and in the Board’s processes for
    obtaining information from management with respect to both the
    Enterprise’s ongoing operations and issues of special
    importance to the Enterprise.

 

    The Board shall report to OFHEO any changes it determines to
    make as a result of this review with respect to the frequency of
    regular Board meetings, the Board’s process (including the
    amount of time allotted) for full Board consideration of Board
    committee reports, and the Board’s processes for obtaining
    information from management with

    

    4

 

    respect to both the Enterprise’s ongoing operations and
    issues of special importance to the Enterprise.

 

    8. Within 120 days from the date of this Order, the
    Board shall determine what limits, if any, to establish on the
    terms of members of the Board. The Board shall report to OFHEO
    any such term limits that are to be established and how such
    limits are to be implemented.

 

    9. Within 120 days from the date of this Order, the
    Board shall develop required qualifications for service as a
    director of Enterprise. Such qualifications may include limits
    on service of Enterprise directors on boards of directors of
    other companies; standards for determining independence for
    outside directors that meet or exceed existing requirements of
    the New York Stock Exchange; and standards for the continuation
    of service as a director for executive officer directors who
    cease to be employees of Enterprise. The Board shall report to
    OFHEO any such qualifications that are to be established and how
    such qualifications are to be implemented.

 

    10. At least once annually, the Board shall review, with
    appropriate professional assistance, the legal and regulatory
    requirements that are applicable to its activities and duties.

 

    11. At least once annually, the Enterprise’s senior
    management shall review, with appropriate professional
    assistance, the legal and regulatory requirements applicable to
    their activities and duties.

 

    12. At least once annually, the Board shall meet with
    senior representatives of OFHEO to ensure that the Board is
    appropriately apprised regarding any significant regulatory
    issues relating to the Enterprise’s operations and
    activities.

 

    13. The Enterprise shall separate the position of Chairman
    and the position of Chief Executive Officer within a reasonable
    period of time.

    

    5

 

    14. Within 180 days from the date of this Order,
    Enterprise shall submit to OFHEO an acceptable plan setting
    forth specific actions that Enterprise will take to foster a
    management culture in which appropriate consideration is given
    to operational stability and legal and regulatory compliance
    throughout the Enterprise, as essential elements of a management
    approach that seeks properly to address all relevant risks and
    to maximize the Enterprise’s long-term value. Such actions
    shall include appropriate training of the Enterprise’s
    officers and employees, and steps to make the Enterprise’s
    compensation system for executive officers consistent with
    fostering the management culture contemplated under this
    paragraph.

 

    Article III     Internal
    Controls
    

 

    15. Within 60 days from the date of this Order, the
    Enterprise shall submit to OFHEO a report on the nature and
    status of PricewaterhouseCoopers’ and any other
    consultant’s review of the Enterprise’s design,
    assessment and evaluation of controls with respect to financial
    reporting. Upon completion of such reviews, the Enterprise shall
    submit to OFHEO a report analyzing the results of such reviews
    and setting forth a plan for remedial steps to be taken by
    management.

 

    16. (a) Within 60 days from the date of this
    Order, the Enterprise shall engage an independent consultant to
    conduct a review of the Enterprise’s internal controls with
    respect to the following:

 

    (i)  Reporting to the Enterprise’s Board of
    Directors.

 

    (ii)  Reporting to the Enterprise’s senior
    management.

 

         (b) Within 180 days from
    the date of its engagement, the consultant shall prepare a
    written report setting forth any recommended changes in the
    Enterprise’s internal controls with respect to the
    following:

 

    (i)  Reporting to the Enterprise’s Board of
    Directors.

 

    (ii) Reporting to the Enterprise’s senior management.

    

    6

 

    The consultant shall provide a copy of its report to OFHEO at
    the same time that the report is provided to the Enterprise.

 

         (c) Within 60 days after
    receipt of the consultant’s report, the Enterprise shall
    submit to OFHEO an acceptable written plan to address the
    recommendations of the consultant’s report.

 

    17. At least once annually, the Enterprise’s senior
    management shall review the effectiveness of the internal
    controls that are the subject of
    paragraphs 15-16,
    and shall report to the Board, or an appropriate Board
    committee, on the results of its review. A copy of senior
    management’s report shall be submitted to OFHEO.

 

    18. The Enterprise shall have established the position of
    chief risk officer with responsibility for the Enterprise’s
    risk oversight function. Within 60 days of the date of this
    Order, the Enterprise shall report to OFHEO on the functions of
    the chief risk officer and to whom such officer shall report.

 

    19. The Enterprise shall have established the position of
    chief compliance officer. Within 60 days of the date of
    this Order, the Enterprise shall report to OFHEO on the
    functions of the chief compliance officer and to whom such
    officer shall report.

 

    Article IV     Internal
    Audit
    

 

    20. Within 120 days from the date of this Order, the
    Enterprise shall submit to OFHEO an acceptable plan setting
    forth specific actions that the Enterprise will take in order to
    address the effectiveness of its internal audit function,
    including but not limited to:

 

    (a) The independence of the internal audit function;

 

    (b) The adequacy of information provided to the audit
    committee;

 

    (c) The adequacy of internal audit staffing;

 

    (d) The adequacy of internal audit planning;

    

    7

 

    (e) The adequacy of internal audit work programs; and

 

    (f) The adequacy of formal management responses to audit
    findings.

 

    Article V     Internal
    Accounting
    

 

    21. (a) Within 60 days of the date of this Order,
    the Enterprise shall engage an independent consultant to conduct
    a review of:

 

    (i)   The current staffing of the
    Enterprise’s internal accounting function in relation to
    Enterprise’s accounting requirements.

 

    (ii)  Any plans to augment the staffing of the
    Enterprise’s internal accounting function in relation to
    the Enterprise’s accounting requirements.

 

    (iii) The structure for ongoing management oversight of the
    internal accounting function, including with respect to ensuring
    timely implementation of new accounting standards and
    requirements.

 

         (b) Within 90 days from
    the date of its engagement, the consultant shall prepare a
    written report setting forth any recommendations with respect to:

 

    (i)  The staffing of the Enterprise’s internal
    accounting function in relation to the Enterprise’s
    accounting requirements.

 

    (ii) The structure for ongoing management oversight of the
    internal accounting function, including with respect to ensuring
    timely implementation of new accounting standards and
    requirements.

 

         (c) Within 60 days of
    receipt of the consultant’s report, the Enterprise shall
    submit to OFHEO an acceptable written plan to address the
    recommendations of the consultant’s report.

 

    Article VI     Risk
    Management Transactions
    

 

    22. (a) Within 90 days after the date of this
    Order, the Enterprise shall develop procedures with respect to:

    

    8

 

    (i)  Appropriate management oversight that a business
    purpose exists for unique transactions relating to risk
    management or where a business purpose is required under
    generally accepted accounting principles for a transaction
    relating to risk management.

 

    (ii) Maintaining appropriate records of the business
    purpose of unique transactions relating to risk management or
    where a business purpose is required under generally accepted
    accounting principles for a transaction relating to risk
    management.

 

         (b) The Enterprise shall
    submit to OFHEO a copy of the procedures developed pursuant to
    paragraph 22(a).

 

    Article VII     Public
    Disclosures and Regulatory Reporting
    

 

    23. Within 90 days from the date of this Order, the
    Enterprise shall submit to OFHEO an acceptable plan setting
    forth specific actions that the Enterprise will take to address
    the adequacy of its public disclosures practices and to have in
    place effective ongoing management oversight of its public
    disclosure practices.

 

    24. Within 90 days from the date of this Order, the
    Enterprise shall review its procedures for ensuring that
    reports, including data, submitted to OFHEO meet all applicable
    legal and regulatory requirements, and shall submit to OFHEO a
    report setting forth those procedures, including any steps the
    Enterprise has made or has determined it should make to enhance
    those procedures.

 

    Article VIII     Oversight
    and Reporting
    

 

    25. The Board shall designate a committee of the Board that
    shall be responsible for overseeing the Enterprise’s
    compliance with the provisions of this Order.

    

    9

 

    26. Management shall prepare quarterly a report on the
    Enterprise’s progress in complying with the provisions of
    this Order, and shall submit such quarterly progress report to
    the designated Board committee for its review and approval.

 

    27. Following approval by the Board committee, a copy of
    such quarterly progress report shall be submitted to OFHEO.

 

    28. The first quarterly progress report pursuant to
    paragraph 27 shall be submitted to the designated Board
    committee by no later than March 15, 2004.

 

    Article IX.     Civil
    Money Penalty
    

 

    29. Within ten days from the date of this Order, the
    Enterprise shall transfer $125 million, in the manner
    specified by the General Counsel of OFHEO, in the name of the
    United States Treasury. This amount shall constitute a civil
    money penalty imposed on the Enterprise pursuant to
    12 U.S.C. § 4636.

 

 

    It is so ordered, this 9th day of December, 2003.

 

    /s/  Armando
    Falcon, Jr.

    Armando Falcon, Jr.

    Director, Office of Federal Housing Enterprise Oversight

    

    10

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