[JURIST] Regulators at the US Securities and Exchange Commission (SEC) and the Office of Federal Housing Enterprise Oversight (OFHEO) [official websites] have announced a $400 million settlement [press release] with the Federal National Mortgage Association, or Fannie Mae [official website]. A 348 page report [text] issued by the OFHEO on Tuesday found the federally-backed, shareholder-controlled lender guilty of violating reporting and accounting provisions of the Securities Exchange Act of 1934 [text] and anti-fraud provisions of the Securities Act of 1933 [text].

The report specifically said that Fannie Mae fraudulently reported future earnings so that top executives would receive maximum performance bonuses. The OFHEO probe was expanded [JURIST report] last April after the OFHEO determined that the company accounted for trusts as "qualifying special purpose entities" to keep the trusts' assets and liabilities off the corporate balance sheet. Fannie Mae has agreed [press release] to correct its accounting practices. The Washington Post has more.