A federal appeals court has revived a shareholder lawsuit against Freddie Mac and former executives, as one of those judges is urging everyone to wrap up the 18-year-old case.

The 6th Circuit Court of Appeals last week overturned a lower court's ruling that quashed a lawsuit from a pension fund against Freddie and its past leaders. The Ohio Public Employees Retirement System, or OPERS, accused the defendants of misleading investors about Freddie Mac's exposure to the types of subprime loans that contributed to the Great Financial Crisis. 

Friday's opinion was first reported by Bloomberg. 

The appellate court vacated an Ohio district court's order denying OPERS' motion for class certification, remanding the case for further litigation. In a 53-page opinion, the three judges concurred on several legal analyses, regarding Freddie Mac's stock price and executives' public statements. 

"Taking the evidence in the light most favorable to OPERS, a reasonable juror could conclude that defendants made materially false or misleading statements," the judges wrote. 

The development is another twist in the case that has "trudged on" for 18 years, wrote U.S. Circuit Judge Amul R. Thapar, in a concurring opinion. Litigation costs have likely exceeded eight figures, and one defendant has died while the other individuals are in their 70s and 80s, he wrote. 

"Eighteen years is far too long," wrote Thapar. "Going forward, everyone needs to make this case a priority."

Why the case continues

OPERS sued Freddie and ex-CEO Richard Syron, ex-chief financial officer Anthony Piszel, and former chief operating officer Eugene McQuade in 2008. The latest opinion recounted public statements by executives describing a minimal subprime exposure, versus internal metrics showing significant exposure to "Alt-A" and "caution loans."

"A reasonable jury could find that Freddie Mac misled investors by publicly disclaiming any subprime exposure without acknowledging significant exposure to loans that many would consider subprime," the judges wrote. 

The class certification denial also hinged on the lower court's dismissal of a market analysis by an expert witness for OPERS. The appellate judges agreed with the pension fund's interpretation of a legal doctrine, explaining in a lengthy portion of the opinion. 

"OPERS asserts that the fraudulent statements maintained an elevated price — not that the statements caused the price to increase," they wrote. 

Next steps

Neither spokespersons for Freddie or OPERS, nor attorneys for the parties, responded to requests for comment Monday.

Judge Thapar raised concern over the length of the case, and compared it to a 16-year lawsuit involving oil giant Halliburton, which resulted in a $100 million settlement and $33 million in plaintiff's fees. He suggested the OPERS suit could already cost over $50 million.

"This litigation has lingered for far too long, hurting the parties, courts, and taxpayers," he wrote.

The lawsuit also named ex-Freddie Mac chief business officer Patricia Cook as a defendant. She later served as Finance of America's CEO and died in 2023. 

Freddie and rival Fannie Mae have already lost one major shareholder lawsuit, when a jury awarded $612 million in damages to GSE shareholders related to the government's takeover and stock repurchase agreement last decade.