Corporate & Securities Law

Fannie Mae, Freddie Mac Preferred Stock Losses

By Keith Griffin

Fannie Mae. Freddie Mac. Over the past 70 years, they?ve guaranteed some 90% of all new home mortgages in the United States. Today, Fannie and Freddie are under conservatorship - a move that?s costing taxpayers more than $150 billion.

And no one is more bitter than the thousands of investors who purchased preferred shares in Fannie Mae and Freddie Mac stock. In 2007 and 2008, investment firms like UBS, Morgan Stanley, Citigroup, Merrill Lynch and others sold billions of dollars of preferred stock issued by the two mortgage giants. In lawsuits that have since followed, investors allege that they never knew about the deteriorating financial health of Freddie Mac and Fannie Mae - a decline that was spurred by the two companies? appetite for risky lending, excessive leverage and investments in toxic derivative products.

When Fannie Mae and Freddie Mac were placed in conservatorship by the federal government, investors with preferred shares watched their investments become essentially worthless.

Many of these investors have filed arbitration claims against the brokerages that they say misrepresented various series of preferred stock in Fannie Mae and Freddie Mac. If you are an institutional investor or retail investor and were misled about Fannie Mae or Freddie Mac preferred shares, we want to hear your story. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA). Please contact us.

Full post as published by Representing Investors on March 01, 2011 (boomark / email).