NEW YORK, Oct. 10, 2008 (GLOBE NEWSWIRE) -- Purchasers of the Federal National Mortgage Association a/k/a Fannie Mae's ("Fannie Mae" or the "Company") (NYSE:FNM) $2.25 billion offering of 8.75% Non-Cumulative Mandatory Convertible Preferred Stock, Series 2008-1 (the "Offering"), are reminded that November 7, 2008 is the deadline to petition the Court to be appointed Lead plaintiff. Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) ("Pomerantz") filed a class action lawsuit in the United States District Court, Southern District of New York, against J. P. Morgan Securities, Inc. (NYSE:JPM); Lehman Brothers, Inc. (Pink Sheets:LEHMQ); Banc of America Securities LLC (NYSE:BAC); Merrill Lynch, Pierce, Fenner & Smith Incorporated (NYSE:MER); and Goldman Sachs & Co. (NYSE:GS) (collectively, the "Underwriter Defendants"); and certain officers of the companies. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The class action was filed on behalf of investors who purchased the Offering on or about May 14, 2008 through September 5, 2008 (the "Class").
The Offering involved the sale of approximately 45 million shares of non-cumulative, convertible preferred stock. It was part of 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. 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 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 Offer, and identified themselves, on the cover of the Offering Circular, as the underwriters for the Offering. The Underwriter Defendants purchased 45 million shares 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 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 the Company 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 the Company through the end of the year.
Lead plaintiffs must meet certain legal requirements. Shareholders outside the United States may join the action. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Teresa L. Webb (tlwebb@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, which has offices in New York, Chicago, Washington, D.C., Columbus, Ohio and the San Francisco Bay area, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.