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Fannie Mae reached a $170 million settlement last week over claims that the housing finance giant misled shareholders about its finances, risk management and mortgage exposure before its government takeover in 2008, according to Reuters.

Shareholders in the company alleged that Fannie Mae "defrauded shareholders and inflated its stock by false and misleading statements about its internal controls, capitalization, accounting, and exposure to subprime and low-documentation ‘Alt-A' mortgages," Reuters reported on Friday.

Of the settlement, $123.8 million will go to common stockholders and $46.2 million to preferred stockholders between Nov. 8, 2006, and Sept. 5, 2008. Reuters reported that the lead plaintiffs include the Massachusetts Pension Reserves Investment Management Board, the State-Boston Retirement Board and the Tennessee Consolidated Retirement System.

The article notes that this settlement averts possible "numerous and substantial risks" of continuing the lawsuit after a similar suit against Freddie Mac was dropped last year.

Fannie Mae and Freddie Mac, regulated by the Federal Housing Finance Agency, have been under FHFA conservatorship since 2008.