Fannie Mae Investor Lawsuit

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”.

If you were invested in Fannie Mae, it may be possible to regain some of your losses by filing a Fannie Mae investor lawsuit, through a securities fraud attorney.