Fannie Mae was a major issuer of preferred stock shares until its financial collapse in 2008. Fannie Mae preferred stock investors were led to believe that their investments were both safe and conservative. Many believed that their investment would be protected by the government as Fannie Mae was considered a government-sponsored enterprise. However, in September of 2008, when Fannie Mae was placed in conservatorship by the federal government due to its exposure to subprime home loans, preferred stock investors watched their investments become virtually worthless.
If you invested in Fannie Mae Preferred Stock, you may be eligible for recovery of your investment losses through filing an individual securities claim. Contact our securities fraud lawyers by completing the Free Case Evaluation form on this page to determine the merits of your claim.
Many investors will often choose to invest in preferred stock shares of a company as these shares usually rate higher in the payout structure than common shareholders. However, when the issuing company experiences financial hardship or files for bankruptcy, preferred share investments still face considerable risk.
In September 2008, the Federal Housing Finance Agency placed Fannie Mae into conservatorship. By this time, Fannie Mae preferred shares ceased paying dividends and were considered relatively worthless. Yet, brokerage firms such as Wachovia Securities (now Wells Fargo Securities), Morgan Stanley, UBS, Smith Barney, Merrill Lynch, Bank of America and others continued actively selling Fannie Mae preferred stock to their customers in secondary public offerings and in the aftermarket.
Failure to Disclose
These financial advisors conveyed misleading information to their clients, presenting the preferred stocks as low-risk investments that were backed by the federal government. They concealed the fact that Fannie Mae was rapidly deteriorating financially.
Due to the brokerage firms’ failure to disclose the truth about Fannie Mae’s financial health, preferred stock investors may have cause to file a claim.
For more information on the legal rights that may be available to Fannie Mae Preferred Stock Investors, complete the Free Case Evaluation form on this page to schedule a no-obligation consultation with one of our securities fraud lawyers.