• Posted on Friday, November 28, 2008
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N. Carolina bickers over who can sue Freddie Mac over losses

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By Dan Kane | Charlotte Observer

A turf battle between state Treasurer Richard Moore and state Attorney General Roy Cooper has cost North Carolina the chance to lead a class action lawsuit against mortgage backer Freddie Mac.

At issue is which state agency should handle lawsuits seeking to protect the state's pension funds.

On Monday, a federal judge in New York found that North Carolina had the most money at stake in the Freddie Mac suit – $18 million – but he denied Moore's request that North Carolina be the lead plaintiff because of Cooper's objections.

"Given the uncertainty surrounding the Treasurer's legal authority to act on the (N.C. retirement system's) behalf, the Court cannot accept his certification that (the retirement system) is willing and able to serve as lead plaintiff," U.S. District Court Judge John Keenan wrote.

The lead plaintiff takes control in a class action suit. Moore said in a statement he was disappointed at losing that position.

"It is unfortunate that this decision means North Carolina cannot use every tool and resource available to get the largest recovery possible for our 820,000 pensioners," Moore said. "Protecting members of the retirement systems and their investments is at the heart of the Department's mission."

Keenan's ruling could affect a second class action suit filed in September against the officers of the other government supported mortgage company, Fannie Mae. Moore petitioned the court to be the lead plaintiff in that case earlier this month, because the state has lost more than $70 million in investments with Fannie Mae.

Both suits accuse the companies' top officials of misrepresentation to investors.

Like the earlier suit against Freddie Mac, Moore has hired an out-of-state law firm and a local firm to represent the pension funds, which serve 820,000 current and retired state and local government employees, including teachers and firefighters. And also like the earlier suit, Cooper's office has filed a letter with the court saying Moore lacked the authority to take action without the approval of Cooper and Gov. Mike Easley.

Read the full story at CharlotteObserver.com

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