BALA CYNWYD, Pa., Nov. 12, 2004 (PRIMEZONE) -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the District of Columbia on behalf of all those who purchased publicly traded securities of the Federal National Mortgage Association (operating as Fannie Mae) (NYSE:FNM) ("Fannie Mae" or the "Company") between October 11, 2000 and September 22, 2004 inclusive (the "Class Period").
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Darren J. Check, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.
The complaint charges Fannie Mae, Franklin D. Raines, J. Timothy Howard, and Leanne G. Spencer with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company applied accounting methods and practices that do not comply with GAAP in accounting for the enterprise's derivatives transactions and hedging activities; (2) that the Company had materially understated its accrued cost-of-access liability by $50-$80 million; (3) that the Company used "cookie jar" accounting wherein Fannie Mae arbitrarily distributed current gains to subsequent quarters in a bid to keep its revenue and earnings growth steady; (4) that the Company deferred expenses to achieve bonus compensation targets; (5) that the Company had insufficient and inadequate internal controls; and (6) that as a result, the value of the Company's net income and financial results was materially understated at all relevant times.
On September 22, 2004, Fannie Mae, prior to the opening of the market, disclosed, in brief, the findings of the Office of Federal Housing Enterprise Oversight ("OFHEO") report. The report revealed that Fannie Mae was engaged in inappropriate accounting practices. News of this shocked the market. Shares of Fannie Mae fell $4.96 per share, or 6.56 percent, to close at $70.69 per share on unusually high trading volume. After the market closed on September 22, 2004, OFHEO released the complete report detailing Fannie Mae's inappropriate accounting practices. The market reacted swiftly. The next trading day shares of Fannie Mae fell an additional $3.24 per share, or 4.58 percent, by noon on September 23, 2004.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered in excess of a billion dollars on behalf of institutional and high net worth individual investors. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com
If you are a member of the class described above, you may, not later than November 22, 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. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca