SEC Reversed Its Initial Charges Re: Fannie Mae's "Accounting Fraud"

Now, even if he had that opinion in 2004, we still win because we have shown through objective evidence that reasonable people disagreed about this including that the SEC changed its mind, but that was not his opinion; and I don't want to leave you with the impression that it was his opinion.   This is what he said when the Plaintiffs asked him about it at his deposition.

   (Whereupon, the videotape was played.)

MR. FINK: And he was asked also by the Plaintiffs what he meant when he said in 2004 that Fannie Mae's interpretation was outside of professional standards. Let's hear what he had to say.

   (Whereupon, the videotape was played.)

MR. FINK: It was his professional judgment, it was an opinion, and, oh, by the way, a lot of other people concluded otherwise. He also admitted that at the time he didn't realize just how many people didn't interpret FAS 133 the same way that he did. "Even I was surprised by the number of companies that after the Fannie Mae restatement actually restated for 133."

So rather than supporting the Plaintiffs' position Mr. Nicolaisen's testimony completely proves Defendants' point. He acknowledged that other people in the profession didn't interpret 133 the way he did. He didn't label them fraudsters.  He didn't label them extremists. The Nicolaisen remark helps the Plaintiffs prove scienter [i.e. fraudulent state of mind] not one bit.