Wednesday, April 1, 2009
Monday, February 9, 2009
Fannie Mae Investor Lawsuit
Only a day after the mortgage finance giant was seized by the U.S. government, a shareholder filed a class action lawsuit in the Southern District Court of New York against four of the former top executives of Fannie Mae. The Fannie Mae investor lawsuit allegs the former top executives issued both materially false and misleading statements regarding its business and investment prospects, as well as misrepresented its financial statements.
According to the lawsuit, the complaint alleges that certain Fannie Mae’s officers and/or directors committed violations of the Securities Exchange Act of 1934. The plaintiff charges that between November 16th, 2007 and September 5th, 2008, the defendants made both materially false and misleading regarding Fannie Mae’s business and prospects, as well as misrepresented the Company’s financial statements. These false and misleading statements caused Fannie Mae stock to trade at artificially inflated prices between November 16th, 2007 and September 5th, 2008, reaching as high as $40.69 per share.
Allegedly on July 7th, 2008, a financial analyst at Lehman Brothers published a report that suggested Fannie Mae may need to raise as much as $46 billion in capital, which caused it's stock to plummet 16% in a single day. Immediately after that disclosure, a former St. Louis Federal Reserve Board President, William Poole, came forward with his opinion that Fannie Mae was nearly insolvent and The New York Times had disclosed that the government was making plans to place the company into a conservatorship. The plaintiff alleged that from July 7th through July 14th, 2008, Fannie Mae’s stock price declined over 48%.
According to the lawsuit “because of their positions within the company and their access to material non-public information available to them but not to the public, the individual defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the positive representations being made were then materially false and misleading”.
Wednesday, February 4, 2009
Wachovia Evergreen Funds
- Huge Losses
If you were invested in the Wachovia Evergreen Fund, a poorly performing security that lost close to 20% of its original value between March and June 2008, you may be able to receive financial compensation for your losses. The Evergreen fund, which was touted by Wachovia as a way to earn steady income while still preserving your investment with little risk, was fully invested in shady sub-prime mortgage securities, which ultimately failed and cost the fund's investors hundreds of millions of dollars.
Evergreen Investments is the name of Wachovia’s investment management branch. The company’s Ultra Short Opportunities Fund lost most of its value just inside of three months time. On March 31, 2008, the fund had an estimated net asset value of $731.4 million. However, by June 19, 2008, the fund had tumbled to $403 million. An Evergreen representative quickly blamed the massive decline in value on “difficult market conditions.” Recently, Wachovia announced liquidation plans that included selling off Evergreen Ultra Short Opportunities Fund shares for $7.48.
Ultra-short funds, like the Evergreen fund, were promoted to investors as safe alternatives to money-market accounts that often provided higher returns because they took more risk. The Evergreen Ultra Short Opportunities Fund is listed under the following symbols: EUBAX, EUBBX, EUBCX and EUBIX.