Fair Fund Distribution In Fannie Mae Settlement Begins

by Glen Shapiro, Lawandtax-News.com, New York

02 May 2007

The US Securities and Exchange Commission on Monday announced the beginning of the distribution process for a $357 million Fair Fund created as part of a settlement last year with Federal National Mortgage Association (Fannie Mae), with regard to charges of financial fraud made in connection with the preparation of its annual and quarterly financial statements.

The distribution is expected to be completed by October.

The SEC brought a settled action against Fannie Mae in May 2006 alleging that, between 1998 and 2004, Fannie Mae issued materially false and misleading financial statements in various reports and in filings with the SEC. Final Judgment was entered on August 9 of that year, and Fannie Mae paid approximately $350 million as part of the resolution of claims brought by the SEC.

Potentially eligible claimants include any person or entity that purchased Fannie Mae common stock between Jan. 14, 1999 and Dec. 22, 2004, or Fannie Mae Class N preferred stock between Sept. 25, 2003 and Dec. 22, 2004, according to the court-approved distribution plan.

"We are pleased to announce the start of the Fannie Mae distribution process," announced Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.

She continued:

"This expeditious distribution process illustrates the Commission's continuing commitment to improving the speed with which funds are returned to defrauded investors in SEC enforcement actions."

Recommended