Shareholders File Securities Class Action Against Fannie Mae

Fannie Mae shareholders filed a securities class action in the SDNY on Monday against the company’s chairman Stephen Ashley, ex-chief executive officer Daniel Mudd and two other former executives. 

According to a report on Bloomberg, the lawsuit alleges that the defendants misled investors about the mortgage company’s finances, specifically whether Fannie Mae had adequate capital. The lawsuit does not name Fannie Mae itself as a defendant. 

As discussed here earlier, a provision of the Housing and Economic Recovery Act of 2008 appears to protect board members at Fannie Mae and Freddie Mac against liability for “acquiescing in or consenting in good faith to the appointment of the Agency as conservator or receiver for that regulated entity.” 

Read the Bloomberg article