Federal National Mortgage Association (Fannie Mae) Non-Cumulative Preferred Stock, Series T (NYSE: FNM-PT) Investor Securities Class Action Lawsuit 09/16/2008

If you purchased Federal National Mortgage Association (Fannie Mae) 8.25% Non-Cumulative Preferred Stock, Series T (NYSE: FNM-PT) preferred shares, you might have certain options and should contact the Shareholders Foundation, Inc.

To have your information reviewed for options and to recieve notifications about this case, please use this form. You may also send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.
Company Name(s): 
Fannie Mae
Case Name: 
Fannie Mae Shareholder Class Action Lawsuit 09/16/2008
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NYSE: FNM-PT
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
09/16/2008
Class Period Begin: 
11/08/2006
Class Period End: 
09/05/2008
Court of Filing: 
U.S. District Court for the Southern District of New York
Date Settled: 
03/03/2015
Settlement Amount: 
$170,000,000
Deadline to Participate in Settlement: 
04/03/2015
Summary: 

This settlement is in relation to (i) the purchase or other acquisition of Fannie Mae common stock and Fannie Mae call options; (ii) the sale of Fannie Mae common stock put options; and (iii) the purchase or other acquisition of Fannie Mae preferred stock

March 3, 2015 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys’ fees and expenses, and dismissed the action with prejudice.

November 12, 2014 - The court preliminarily approved the settlement.

October 24, 2014 - Parties filed a stipulation of settlement.

August 30, 2012 - The court granted in part and denied in part the defendants' motions to dismiss.

April 4, 2012 - The defendants filed motions to dismiss.

March 2, 2012 - The lead plaintiffs filed a second amended complaint.

May 11, 2011 - The lead plaintiff filed an amended complaint.

September 30, 2010 - The court granted in part and denied in part the defendants' motions to dismiss.

September 18, 2009 - More defendants filed additional motions to dismiss.

July 13, 2009 - The defendants filed a motion to dismiss.

June 22, 2009 - The lead plaintiffs filed an amended consolidated complaint on behalf of investors who purchased Federal National Mortgage Association (Fannie Mae) 8.25% Non-Cumulative Preferred Stock, Series T (NYSE: FNM-PT) preferred shares in connection with the May 13, 2008 offering. The lead plaintiffs allege that the defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by issuing false and misleading statements in relation to the May 13, 2008 Federal National Mortgage Association (Fannie Mae) 8.25% Non-Cumulative Preferred Stock, Series T (NYSE: FNM-PT) public offering.

April 16, 2009 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

November 7, 2008 - Lead plaintiff motions were filed.

September 17, 2008 - An investor in shares of Federal National Mortgage Association (Fannie Mae) 8.25% Non-Cumulative Preferred Stock, Series T (NYSE: FNM-PT) filed a lawsuit in the U.S. District Court for the Southern District of New York against the underwriters of Federal National Mortgage Association (Fannie Mae)’s May 13, 2008 offering of 8.25% Non-Cumulative Preferred Stock, Series T over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made in relation to the May 13, 2008 offering. Included in the named defendants are Merrill Lynch, Citigroup, Morgan Stanley, UBS Securities and Wachovia Capital Markets, along with four senior executives of Federal National Mortgage Association (Fannie Mae).

The offering involved the sale of approximately 80 million shares of non-cumulative, non-convertible, perpetual fixed-rate preferred stock, at an offering price of $25 per share. It was part of Federal National Mortgage Association (Fannie Mae)’s effort to raise at least $6 billion in new capital through public offerings of new securities during May, 2008. The new capital was to help shore up the company’s balance sheet so that capital requirements could continue to be satisfied, enhance shareholder value and provide stability to the secondary mortgage market. Federal National Mortgage Association (Fannie Mae)’s senior officers, defendants here, repeatedly assured the marketplace that this round of capital-raising would put the company on a sound financial footing and that they believed that additional infusions of cash would not be necessary for the foreseeable future.

The five Underwriter Defendants were the managing underwriters for the offering. As such, they participated in the review and drafting of the Offering Circular, which was the official sales document for the offering, solicited sales of the shares, and identified themselves, on the cover of the Offering Circular, as the underwriters for the offering. The Underwriter Defendants purchased 14 million shares each of the offering, delivered the Offering Circular to prospective investors, and resold those shares to investors in the offering.

The complaint alleges that the Underwriter Defendants’ statements made in connection with the offering were materially false and misleading because (a) they grossly overstated Federal National Mortgage Association (Fannie Mae)’s capitalization, claiming that the company had a substantial capital surplus when, in fact, it was including on its balance sheet, at full value, about $36 billion in deferred tax assets that were, in fact, valueless; (b) they failed to disclose the serious risk that current account changes under consideration by the FASB could force Federal National Mortgage Association (Fannie Mae) to bring over $2 trillion of currently off-balance-sheet obligations onto its financial statements, depleting its capital surplus even further; and (c) the individual defendants falsely asserted that management believed that the current securities offerings of the company would be adequate to see Federal National Mortgage Association (Fannie Mae) through the end of the year.