Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) Investor Securities Class Action Lawsuit 09/23/2004

If you purchased shares of Federal National Mortgage Association (Fannie Mae) (NYSE: FNM), 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 09/23/2004
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NYSE: FNM
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
09/23/2004
Class Period Begin: 
04/17/2001
Class Period End: 
12/22/2004
Court of Filing: 
U.S. District Court for the District of Columbia
Deadline To File for Lead: 
11/23/2004
Date Settled: 
12/06/2013
Settlement Amount: 
$153,000,000
Deadline to Participate in Settlement: 
11/20/2013
Summary: 

December 6, 2013 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys’ fees and expenses.

October 31, 2013 - The court held a settlement hearing.

June 7, 2013 - The court preliminarily approved the settlement.

May 8, 2013 - Parties filed a stipulation of settlement.

December 7, 2012 - The court ordered the dismissal of another individual defendant as to all counts.

October 16, 2012 - The court ordered the dismissal of another individual defendant as to all counts.

September 20, 2012 - The court ordered the dismissal of an individual defendant as to all counts

July 18, 2008 - The court entered the order of the voluntary dismissal without prejudice of a particular plaintiff's January 31, 2008 notice.

February 12, 2008 - The court entered the order of the voluntary dismissal without prejudice of a particular plaintiff's February 7, 2008 notice.

February 7, 2008 - A plaintiff filed a notice of voluntary dismissal.

January 31, 2008 - A plaintiff filed a notice of voluntary dismissal.

August 6, 2007 - The court ordered a change in lead counsel.

July 31, 2007 - The court granted 4 motions to dismiss and filed on August 17, 2006 and a single motion to dismiss from September 6, 2006. The court also denied in part and granted in part a motion to dismiss filed on August 17, 2006.

May 8, 2007 - The court granted the November 13, 2006 motion to dismiss.

January 24, 2007 - The court denied the September 28, 2006 and November 9, 2006 motions to dismiss.

November 13, 2006 - Another defendant filed a motion to dismiss the second amended complaint of the lead plaintiffs

November 9, 2006 - The defendants filed a motion to dismiss of one of the separate plaintiffs' second amended complaints.

October 13, 2006 - The court denied 8 defendants' motions to dismiss and 2 were denied as moot.

September 6 and September 28, 2006 - Two additional defendants filed a motions to dismiss the second amended complaint of the lead plaintiffs.

August 18, 2006 - Separate plaintiffs filed 2 second amended complaints.

August 17, 2006 - Defendants filed numerous motions to dismiss the second amended complaint.

August 14, 2006 - The lead plaintiffs filed a second amended consolidated complaint.

May 15-16, June 16, and June 30, 2006 - Defendants filed numerous motions to dismiss.

April 27, 2006 - Lead plaintiffs filed an amended consolidated complaint n behalf of investors who purchased of Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) common stock between April 17, 2001 and September 27, 2005. The plaintiffs allege that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between April 17, 2001 and September 27, 2005.

November 23, 2005 - Another motion to dismiss was filed.

May 3, 2005 - Defendants filed numerous motions to dismiss.

April 7, 2005 - All cases were consolidated.

March 4, 2005 - Lead plaintiffs filed a consolidated complaint on behalf of investors who purchased of Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) common stock between April 17, 2001 and September 21, 2004. The plaintiffs allege that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between April 17, 2001 and September 21, 2004.

January 13, 2005 - The lead plaintiffs and lead counsel were appointed.

November 22, 2004 - Lead plaintiff motions were filed.

September 23, 2004 - An investor in shares of Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) filed a lawsuit in the U.S. District Court for the District of the District of Columbia against Federal National Mortgage Association (Fannie Mae) over alleged violations of Federal Securities Laws.

The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 13, 2000 and September 22, 2004.

The complaint alleges that, between January 13, 2000 and September 22, 2004, defendants repeatedly presented Federal National Mortgage Association (Fannie Mae) as a conservative, stable and safe investment, and boasted of Federal National Mortgage Association (Fannie Mae)'s steady quarter-over-quarter earnings increases, even in times of market volatility. Defendants stated that, "Fannie Mae has a record of growth and stability in earnings that few companies in any industry can match. We have consistently shown ourselves to be one of the strongest and most reliable financial institutions in America." In 1998 Federal National Mortgage Association (Fannie Mae) set itself a public goal of doubling its earnings per share in the five years ending in 2003 and, throughout January 13, 2000 to September 22, 2004, reported on its healthy progress toward achievement of the goal. In July 2000, Federal National Mortgage Association (Fannie Mae) boasted of having achieved 50 consecutive quarters of "record operating earnings per common share," and throughout January 13, 2000 to September 22, 2004, attributed its success, in part, to "proven risk management capabilities." Federal National Mortgage Association (Fannie Mae) issued numerous other false and misleading statements and presented the public with materially false and misleading financial statements that created the illusion that Federal National Mortgage Association (Fannie Mae) was a safe and steady earner and largely immune to interest rate fluctuations and other macro-economic factors that, in comparable institutions, resulted in earnings volatility.

The truth emerged on September 22, 2004. On that date, Federal National Mortgage Association (Fannie Mae) released a statement that the Office of Federal Housing Enterprise Oversight would release a report which stated in relevant part that Federal National Mortgage Association (Fannie Mae): (a) applied accounting methods and practices that do not comply with GAAP in accounting for the enterprise's derivatives transactions and hedging activities; (b) employed an improper "cookie jar" reserve in accounting for amortization of deferred price adjustments under GAAP; (c) tolerated related internal control deficiencies; (d) in at least one instance deferred expenses apparently to achieve bonus compensation targets; and (e) maintained a corporate culture that emphasized stable earnings at the expense of accurate financial disclosures. The report further stated that "the matters detailed in this report are serious and raise doubts concerning the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision, and the overall safety and soundness of the Enterprise."

After Federal National Mortgage Association (Fannie Mae) released its statement, Federal National Mortgage Association (Fannie Mae) shares (NYSE: FNM), which had opened at $74.18 that day, fell $4.18, or 5.6 percent, to $70.00 and closed out the day at $70.69. After the close of the market, the OFHEO issued its full 198-page report and, subsequently, in a meeting with reporters, OFHEO officials stated that the vast majority of Federal National Mortgage Association (Fannie Mae)'s $1 trillion derivative portfolio was tainted, and that those hedge relationships would likely get "unwound" if Federal National Mortgage Association (Fannie Mae) restated past earnings so that gains and losses that had previously been recorded on Federal National Mortgage Association (Fannie Mae)'s balance sheet would be booked under income. On release of the full OFHEO Report, Federal National Mortgage Association (Fannie Mae) shares fell another 5.9 percent to a low of $66.50 on September 23, 2004, for a two day decline of $7.68, or 10.3 percent.

Federal National Mortgage Association (Fannie Mae) is one of the biggest financial institutions in the world, with $1 trillion in reported assets and $961 billion in reported debt as of December 31, 2003. Both Federal National Mortgage Association (Fannie Mae) and Freddie Mac, its smaller rival, are shareholder-owned but charted by the United States Congress for the purpose of maintaining liquidity in the secondary mortgage market.