NEW YORK, Oct. 7, 2008 (GLOBE NEWSWIRE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) ("Pomerantz") has filed a class action lawsuit in the United States District Court for the Southern District of New York (Case No. 08 Civ 8547 (GEL)), against Lehman Brothers, Inc. (Pink Sheets:LEHMQ); Merrill Lynch, Pierce, Fenner & Smith Incorporated (NYSE:MER); J. P. Morgan Securities, Inc. (NYSE:JPM); and Goldman Sachs & Co. (NYSE:GS) (collectively, the "Underwriter Defendants"); and certain officers of Fannie Mae. 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 purchasers of the Federal National Mortgage Association a/k/a Fannie Mae's ("Fannie Mae" or the "Company") (NYSE:FNM) 8.25% Fixed-To-Floating Rate Non-Cumulative Preferred Stock Series S (the "Preferred Stock"), which were first offered to the public on or about December 11, 2007 (the "Offering"). The Class Period extends from December 11, 2007 until September 5, 2008.
If you wish to serve as lead plaintiff, you must move the Court no later than November 7, 2008.
The Offering involved the sale of approximately 280 million shares of the Preferred Stock at a price of $25 per share. Thus, Fannie Mae raised about $7 billion in this Offering, less underwriting fees. 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 four Underwriter Defendants were the lead 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 lead underwriters for the Offering. As co-book-running managers, Lehman Brothers Inc. and Merrill Lynch each purchased, for resale, 100,800,000 shares of the Preferred Stock; and as senior co-managers of the offering, Goldman Sachs & Co. and J.P. Morgan Securities, Inc., each purchased, for resale, 22.4 million shares. The underwriters delivered the Offering Circular to prospective investors, and resold to investors the shares they had bought 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, billions of dollars in deferred tax assets that were 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; (c) they misrepresented the value of Alt-A and subprime mortgages on their books; and (d) the individual defendants falsely asserted that management believed that the current securities offerings of the company would be adequate for the foreseeable future.
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.
More information on this and other class actions can be found on the Class Action Newsline at www.globenewswire.com/ca/