Fannie Mae has reached a $170 million settlement of a lawsuit accusing it of misleading shareholders about its finances, risk management and mortgage exposure before it was seized by the U.S. government during the 2008 financial crisis. The settlement, which requires court approval, was disclosed in a Friday filing with the U.S. District Court in Manhattan. It resolves shareholder allegations that Fannie Mae defrauded shareholders and inflated its stock by issuing false and misleading statements about its internal controls, capitalization, accounting, and exposure to subprime and low-documentation "Alt-A" mortgages. The settlement allocates $123.8 million to common stockholders and $46.2 million to preferred stockholders between Nov. 8, 2006 and Sept. 5, 2008. Fannie Mae's market value peaked during that period at more than $60 billion. It is now $2.71 billion. "We are pleased to put this matter behind us," Joseph Grassi, Fannie Mae's interim general counsel, said in a statement.
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