Fannie Mae, KPMG agree to pay $153 million to end shareholder lawsuit

Mortgage finance company Fannie Mae and accounting firm KPMG have agreed to pay $153 million to settle a shareholder lawsuit filed by Ohio pension funds and others accusing the companies of issuing false and misleading financial reports, the Ohio attorney general said on Tuesday.

The settlement would end litigation that began in 2004 and requires approval from the judge overseeing the case, U.S. District Judge Richard Leon in Washington, D.C.

The lawsuit claimed that Fannie Mae and its then-auditor, KPMG, publicly issued materially false and misleading financial reports that artificially inflated the price of Fannie Mae's securities.

The class of plaintiffs includes purchasers of Fannie Mae common stock for a period from April 2001 through December 2004.

Fannie Mae is "satisfied with the outcome and pleased to put the matter behind us," its general counsel Bradley Lerman said in a statement.

KPMG said in a statement that it is pleased that the long-running litigation "relating to matters at Fannie Mae occurring more than a decade ago," has been resolved and that settlement to avoid protracted litigation was in the firm's best interest.

The Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio served as lead plaintiffs in the case.

"The settlement brings closure to this matter and recovery for our Ohio pension funds and class members," Ohio Attorney General Mike DeWine said in a statement.

In April, US-controlled Fannie Mae posted a record $7.6 billion in quarterly earnings.

The case is In Re Fannie Mae Securities Litigation, U.S. District Court for the District of Columbia, No. 04-01639.

(Reporting By Erin Geiger Smith. Editing by Andre Grenon)