COLCHESTER, Conn., Nov. 2, 2004 (PRIMEZONE) -- Scott +Scott, LLC (http://www.scott-scott.com ) of Colchester, CT. has filed a complaint charging Fannie Mae and certain of its officers and directors with violations of the Federal Securities Laws (Securities Exchange Act of 1934). Fannie Mae (fanniemaelitigation@scott-scott.com and nrothstein@scott-scott.com ) provides financing for home mortgages in the United States. The Company was chartered by the United States Congress to provide liquidity in the secondary mortgage market to increase the availability and affordability of homeownership for low, moderate and middle income Americans. The firm, with offices in Ohio and California, announced that a class action was commenced on October 8, 2004 in the United States District Court for the Southern District of New York, on behalf of purchasers of Federal National Mortgage Association ("Fannie Mae" or the "Company") (NYSE:FNM) common stock during the period between October 16, 2003 and September 22, 2004 (the "Class Period"). Other firms have stated class periods back to January 13, 2000. Anyone desiring information as to either class periods can contact the firm.
Fannie Mae, the largest U.S. home funding company, has said it has sold $1 billion of two-year global callable notes due Nov. 22, 2006, said joint book-lead manager Credit Suisse First Boston on Thursday. The 3.00 percent notes were priced at par. The notes have a one-time European call feature on Nov. 22, 2005. HSBC Securities Inc. and Morgan Stanley were the other joint lead managers on the sale. Settlement is Nov. 22.
If you are a member of the class described above, you may, not later than sixty days from September 23, 2004 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.
LAW FIRM DEDICATION
Scott + Scott, LLC, which prides itself on its dedication to the class and its tenacity for the interest of the class, recently won an important decision in the Halliburton Securities Litigation (NYSE:HAL) case on behalf of its Lead Plaintiff halting a settlement that was deemed inadequate by the Court and completed secretly behind its lead plaintiff's back (a non-profit charitable organization). Scott + Scott. LLC fought this battle to successfully have final approval denied. This unusual procedural victory took over a year and a half: http://www.washingtonpost.com/wp-dyn/articles/A13102-2004Sep10.html or http://www.taipeitimes.com/News/biz/archives/2004/09/12/2003202628.
FANNIE MAE DETAILS
The Complaint alleges that the Company issued materially false and misleading statements in an effort to separate themselves from the scandal that occurred at the Federal Home Loan Mortgage Corporation ("Freddie Mac"), a similar, but smaller version of its rival -- Fannie Mae. In June 2003, Freddie Mac disclosed that it had understated profits by some $4.5 billion for 2000-2002. In an effort to smooth earnings and maintain its image on Wall Street as a steady performer, the accounting crisis brought the departure of several top Freddie Mac executives. Investigations by the Justice Department and the SEC, and a record $125 million fine in a settlement with the Office of Federal Housing Enterprise Oversight ("OFHEO"), (the office that regulates both Fannie Mae and Freddie Mac and is responsible for ensuring that they are adequately capitalized and operating safely). Thereafter, OFHEO initiated an eight-month investigation of Fannie Mae's accounting practices in which the agency found a pattern of manipulation aimed at smoothing out volatility in profits from quarter to quarter that was similar to which occurred at rival Freddie Mac.
ACCOUNTING PRACTICS
The complaint also alleges that each of the defendants that the Company employed accounting practices in violation of GAAP in order to maintain the appearance of stable earnings; and that the Company's officers, including the Individual Defendants, committed these violations in order to achieve performance bonuses. It is further alleged that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and that as a result, the value of the Company's net income and financial results were materially misstated at all relevant times.
On September 22, 2004, the Company issued a press release announcing that OFHEO had finished their special examination of Fannie Mae's accounting policies and practices and described that Fannie Mae had engaged in improper accounting activities in violation of GAAP. In reaction to the news of the accounting improprieties, the price of Fannie Mae stock dropped precipitously falling from $75.65 per share on September 22, 2004, to as low as $66.50 per share on September 23, 2004, on extremely heavy volume.
SCOTT + SCOTT, LLC
Scott + Scott, LLC, a Connecticut-based law firm with offices in Ohio and California, is a law firm with a national practice and reputation. Scott + Scott dedicates itself to client communication and satisfaction. The firm is currently litigating major securities, antitrust and employee retirement plan cases throughout the United States and represents pension funds, charities, foundations, individuals and other entities worldwide -- in both class and non-class cases. Please visit our website at http://www.scott-scott.com to learn more about the firm, its practice and other cases. If you wish to discuss this action with an attorney or have any questions concerning this notice, your rights or any matter within our expertise, please contact attorney Neil Rothstein at nrothstein@scott-scott.com or by calling 800-404-7770 (EDT) or 800-332-2259 (PDT). You can dial direct in California at 619-233-4565. Scott + Scott, LLC is located at 108 Norwich Avenue, Colchester, CT 06415; phone: 860/537-3818; fax: 860/537-4432. This release is issued in accordance with the applicable federal law of the United States.
OTHER SCOTT + SCOTT NEWS
EMC Insurance Group, Inc.(NYSE:EMCI) ("EMCI" or the "Company") announced that it planned to restate its financial results for the third quarter of 2004 and the previous nine months, from January 30, 2004 to September 30, 2004. The restatement was the result of incorrect income recognition during the third quarter of 2004, resulting in a reduction of $441,000 in the previously reported third quarter investment income and a reduction of $418,000 in the previously reported third quarter net income. The overstatement was caused by a manual input error on the yield of one of EMC's municipal securities. This input error led EMC to overstate its accrued interest income on the municipal security, and, in turn, led to the incorrect income recognition during the third quarter of 2004. Other securities matters pending or under investigation include Stillwater Mining (NYSE:SWC), Converium Holding AG (NYSE:CHR), Star Gas (NYSE:SGU and SHG), IVAX (AMES:IVX), Chiron Corp. (NASDAQ:CHIR) and more.
INSURANCE SCANDALS: Scott + Scott is also currently working on matters involving the recent insurance scandals including Hartford (NYSE:HIG), American International Group (NYSE:AIG), Aon Corp. (NYSE:AOC), ACE, Ltd.(NYSE:ACE), Marsh & McLennan (NYSE:MMC) and others.
MERCK 401K/ SECURITIES
Scott + Scott, LLC is currently working on various cases against Merck (NYSE:MRK). It was reported on November 1, 2004: "Internal e-mails and other documents from Merck & Co. show the company fought for years to keep safety concerns from undermining the drug's commercial prospects, the Wall Street Journal reported on Monday.
Vioxx, a drug known as a COX-2 inhibitor, was withdrawn from the market after it was shown to double the risk of heart attack and stroke in patients who had been taking it for at least 18 months. Vioxx generated some $2.5 billion in annual sales, and its withdrawal pummeled Merck's shares.
On Monday, the Journal reported that an e-mail dated March 9, 2000, suggested Merck recognized that something in Vioxx was linked to increased heart risk.
Edward Scolnick, Merck research chief at the time, wrote in the e-mail that cardiovascular events "are clearly there" and called it a "shame."
Any information needed on any of these cases can be obtained by calling Scott + Scott, LLC at 800/404-7770 or 800/332-2259
For more information on this and other class action lawsuits please visit the Class Action Newsline at www.primezone.com/ca