Shares in Fremont General Corp. plummeted nearly 7 percent Wednesday after the former subprime lender reported a big first-half loss and said it restated its fiscal 2006 earnings.

The Santa Monica-based company reported a loss of $265 million (-$3.45 per share) for the quarter ending June 30 as well as a $591 million loss from the first quarter. Fremont’s first-half results were stung by costs tied to shuttering its subprime lending business, the company said. Combined, the company lost $856 million (-$11.14) in the first half.

Fremont added that in 2006 it lost $202 million (-$2.72 per share), with a bulk of the losses coming as a result of a $338 million loss on the sale and securitization of mortgages during the year.

Fremont delayed reporting its first-half earnings to further audit its financials because of the fallout in the subprime mortgage market, the company said.

Shares in Fremont surged last week after a New York-based hedge fund announced that it had upped its stake in the struggling company. This news came a month after Texas billionaire and former Chief Executive of Golden State Bancorp., Gerald Ford, reneged on a proposed rescue plan for Fremont.

Shares of Fremont General lost 6.8 percent, or 27 cents, to $3.72 Wednesday in trading on the New York Stock Exchange.