MSNBC.com
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Class-Action Suit Filed Against Fannie Mae
WPBF-TV
updated 8:32 p.m. ET, Thurs., Sept. 11, 2008
DELRAY BEACH, Fla. - A Delray Beach law firm Thursday announced the filing of a class-action lawsuit on behalf of Florida purchasers of Fannie Mae stock. The Law Offices of Aronberg & Aronberg said the complaint names Fannie Mae's entire board and several of its former officers as defendants.
The complaint alleges the board violated the Securities Exchange Act of 1934 and the Florida Deceptive Trade Practices Act by making false statements, failing to disclose adverse conditions of the company, causing stock purchasers to be deceived about the value of the company, and artificially inflating the price of the stock.
The lawsuit comes after the federal government took control of government-sponsored enterprises Fannie Mae and Freddie Mac.
The lawsuit alleges the board issued false positive statements about the company, artificially inflating its stock. Fannie Mae's stock dropped this week to below $1 per share.
A statement by Aronberg & Aronberg said the lawsuit was filed to ensure that "the thousands of past and current Florida stockholders of Fannie Mae are not swallowing millions of dollars in losses while the board members walk away with millions of dollars in compensation packages."
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FLORIDA CLASS ACTION FILED AGAINST SMITH BARNEY FOR IMPROPERLY RECOMMENDING FANNIE MAE AND FREDDIE MAC
The Law Offices of Aronberg & Aronberg announces that it has filed a class action lawsuit in Palm Beach County, Florida on September 15, 2008, on behalf of all Florida customers of Citigroup/Smith Barney brokerage who were improperly placed into Fannie Mae and Freddie Mac stock in 2008.
We believe Smith Barney placed thousands of its customers into Fannie/Freddie stock this past Spring and even into the Summer months of 2008 when Smith Barney should have realized that Fannie/Freddie was on the verge of collapse. Smith Barney, a holder of millions of shares of Fannie and Freddie, misrepresented the true risks associated with Fannie and Freddie stocks. We have seen numerous complaints that Smith Barney stock brokers told customers that the risks of Fannie/Freddie were minimal/non-existent and that they were both “safe” and “secure” investments. We have also seen that many of the victims of this debacle were elderly income required customers. In one case, the Florida investor was told by a Smith Barney broker that Fannie was “no risk at all”. One month after that same investor bought Fannie on advice of her Smith Barney broker, the same broker told her to buy more.
Smith Barney customers were also misinformed that, in the unlikely event Fannie or Freddie went under, the government would step in and protect their investments. While this may be true with bond holders, this obviously was not the case with purchasers of Fannie/Freddie stock.
These types of misrepresentations are clearly violations of Florida’s Unfair and Deceptive Trade Practices Act which prevents unfair or deceptive acts or practices in conducting of any trade or commerce.
The Class Action does not name any individual brokers or advisors as defendants. Instead, our only defendant is Citigroup/Smith Barney for making unsuitable investment recommendations and misrepresentations.
It is again our intention to see to it that the thousands of Florida Citigroup/Smith Barney customers who were recommended and misled into buying Fannie/Freddie stock are reimbursed for their losses by the company who led and recommended that they buy these unsafe investments.
The Law Offices of Aronberg & Aronberg is active in litigation pending both in federal and state courts. You may visit our web site at www.aronberglaw.com for information or contact:
David T. Aronberg, Esq.
2160 West Atlantic Avenue
Delray Beach, Florida 33445
Local: 561-266-9191
Toll Free: 1-877-795-2993
e-mail: daronberg@aronberglaw.com
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