Industry News

Shareholders sue Fannie Mae

Lawsuits allege accounting missteps misled investors

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Troubled mortgage giant Fannie Mae now faces a round of shareholder lawsuits seeking billions of dollars in stock losses stemming from the company's accounting missteps. Since a report that found evidence of improper accounting at the company was released last week, several lawsuits have been filed in federal court, naming Fannie Mae, Chairman Franklin Raines, Chief Financial Officer Timothy Howard and Chief Operating Officer Daniel Mudd as defendants. The suits allege the company misrepresented financial results and issued false and misleading statements to appear as a low-risk, steadily growing company to investors. "The Company issued numerous other false and misleading statements and presented the public with materially false and misleading financial statements that created the illusion that 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," a...