Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Announces Class Action Lawsuit Against Fremont General Corporation

Business Wire, Sept 26, 2007

WASHINGTON -- The law firm Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has filed a lawsuit in the United States District Court for the Central District of California on behalf of its client and on behalf of other similarly situated purchasers of Fremont General Corporation ("Fremont General" or the "Company") (NYSE:FMT) common stock between May 9, 2006 through and including February 27, 2007 (the "Class Period").

The complaint charges Fremont General and several of its officers and directors during the Class Period with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"). It is alleged that defendants omitted or misrepresented material adverse facts about the Company's financial condition, business prospects, and revenue expectations during the Class Period. Fremont General operates as the holding company for Fremont Investment & Loan ("FIL"), which engages in residential real estate lending business in the United States. The Company originates non-prime or sub-prime residential real estate loans through independent brokers on a wholesale basis, which are primarily sold to third party investors.

Specifically, the complaint alleges that, during the Class Period, defendants issued numerous materially false and misleading statements which caused Fremont General's securities to trade at artificially inflated prices. As alleged in the complaint, these statements were materially false and misleading because they misrepresented and failed to disclose that: (1) the Company was operating with management whose policies were detrimental to FIL; (2) the Company was operating FIL without effective risk management policies and procedures in place in relation to FIL's primary line of business of brokered sub-prime mortgage lending; (3) the Company was operating FIL without effective risk management policies and procedures in place in relation to FIL's other primary line of business of commercial real estate construction lending; (4) the Company was operating with inadequate underwriting criteria and excessive risk in relation to the kind and quality of assets held by FIL; (5) the Company was operating with a large volume of poor quality loans and was engaging in unsatisfactory lending practices; (6) the Company was operating without an adequate strategic plan in relation to the volatility of FIL's business lines and the kind and quality of assets held by FIL and in such a manner as to produce low and unsustainable earnings; (7) the Company was operating with inadequate provisions for liquidity in relation to the volatility of FIL's business lines and the kind and quality of assets held by FIL; (8) the Company was marketing and extending adjustable-rate mortgage ("ARM") products to sub-prime borrowers in an unsafe and unsound manner that greatly increased the risk that borrowers would default on the loans or otherwise cause losses to FIL; (9) the Company was making mortgage loans without adequately considering the borrower's ability to repay the mortgage according to its terms; and (10) the Company was operating inconsistently with the Federal Deposit Insurance Corporation's ("FDIC") Interagency Advisory on Mortgage.

According to the complaint, on February 27, 2007, after the market closed, Fremont General issued a press release announcing that it was delaying the filing of its 2006 10-K with the SEC and that it "intends to file a Form 12b-25 with the Securities and Exchange Commission explaining the reasons therefor." On this news, the Company's share price declined $2.84 per share, or 24 percent, to close on February 28, 2007, at $8.81 per share, on unusually heavy trading volume. Then, on March 2, 2007, the Company did in fact file a Form 12b-25 with the SEC and informed investors that it was unable to timely file its Form 10-K and that it intended to exit its sub-prime residential real estate lending business. Moreover, the Company announced that Fremont General, FIL, and Fremont General Credit Corporation would enter into a voluntary cease and desist order with the FDIC related to allegations of unsafe or unsound banking practices.

If you are a member of the class, you may, no later than November 13, 2007 request that the Court appoint you as Lead Plaintiff of the class. Any member of the purported class may move the Court to serve as Lead Plaintiff through counsel of their choice or may choose to remain an absent class member.

Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has significant experience in prosecuting investor class actions and actions involving securities fraud. The firm has offices in Washington, D.C., New York, Philadelphia, Chicago, San Francisco, and London, and is active in major litigation pending in federal and state courts throughout the nation. You may visit the firm's website at www.cmht.com.

The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm to lead positions in complex multi-district or consolidated litigation. Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has taken a lead role in numerous important cases on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total in the billions of dollars.