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Fremont General says court reinstates two suits

March 07, 2007|From Bloomberg News

Fremont General Corp., the California thrift whose mortgage-lending arm was shut last week by U.S. bank regulators, said Tuesday that an appeals court had reinstated two 2004 lawsuits brought by the state's insurance commissioner.

The California appeals court on Feb. 28 sent both cases back to a trial court in Los Angeles for further proceedings, Santa Monica-based Fremont said in a regulatory filing. The trial court dismissed the cases in 2005.

Fremont said the lawsuits were "without merit" and the company intended to "vigorously defend" itself.

Shares in Fremont tumbled 32% on Monday to $5.89 after the Federal Deposit Insurance Corp. ordered the company to halt improper home loans. The company put most workers from its loan-underwriting office in Anaheim on paid leave. On Tuesday, the shares rose 89 cents to $6.78.

In June 2004, then-Insurance Commissioner John Garamendi filed suit against Fremont, alleging improper use of deductions related to net operating losses, according to the filing.

The Los Angeles trial court dismissed the case in November 2005, and the commissioner appealed.

The second case, brought in August 2004, related to alleged improper use of net operating losses by Comstock Insurance Co., which is a predecessor of Fremont Indemnity Co.

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