Friday, October 24, 2014
Labaton Sucharow Secures $170 Million Recovery from Fannie Mae
NEW YORK (October 24, 2014) — Labaton Sucharow announced today a proposed $170 million settlement with the Federal National Mortgage Association (Fannie Mae) on behalf of co-lead plaintiff State-Boston Retirement System (State-Boston) in In re Fannie Mae 2008 Securities Litigation, 08-CV-7831 (S.D.N.Y.). State-Boston is one of two court-appointed lead plaintiffs for a proposed common shareholder class, along with the Massachusetts Pension Reserves Investment Management, and the Tennessee Consolidated Retirement System is the court-appointed lead plaintiff for a proposed preferred shareholder class. The settlement, subject to court approval, will benefit thousands of class members.
State-Boston Chairman Daniel J. Greene, Esq. said, "We're extremely pleased with the results, particularly in light of the dismissal of a similar lawsuit against Fannie Mae's sibling company, Freddie Mac, which was recently affirmed by a federal appellate court. Unlike the plaintiffs in the Freddie Mac case, we were able to successfully allege that investors' losses were caused by Fannie Mae's statements and actions rather than by the financial crisis."
Represented by Labaton Sucharow LLP partners Thomas A. Dubbs, Louis Gottlieb, and Thomas G. Hoffman, Jr., State-Boston asserted securities fraud claims against Fannie Mae and two of its former officers on behalf of investors in Fannie Mae during the class period of November 8, 2006 to September 5, 2008. Specifically, State-Boston alleged that the defendants violated the Securities Exchange Act of 1934 by making false and misleading statements concerning the company's internal controls and its exposure to subprime and other risky mortgage loan products. Thomas Dubbs, the lead partner on the case, noted the "risks were indeed substantial, and knowing the outcome in the Freddie Mac case makes this recovery even more significant to us. We're very happy with the result achieved for the class."
State-Boston further alleged that Fannie Mae's true exposure to these risky assets was revealed in a series of partial disclosures that culminated in the September 7, 2008 announcement by the company's regulator, the Federal Housing and Finance Agency (FHFA), that it had placed the company into conservatorship.
"The Boston Retirement System believes it's important to prosecute securities class action cases such as this one in order to protect the assets that it holds for its members and retirees," said Chairman Greene.
For a detailed description of the case, click here.