NEW YORK, April 30, 2012 (GLOBE NEWSWIRE) -- The Securities Arbitration Law Firm of Stuart D. Meissner LLC, www.StockESQ.com, is investigating and/or pursuing securities arbitration claims against Brokerage Firm Merrill Lynch, Citigroup, Morgan Stanley Smith Barney and other firms with the Financial Industry Regulatory Authority's ("FINRA") office of Dispute Resolution, on behalf of investors who sustained losses in Freddie Mac and Fannie Mae Preferred Securities. Claims allege that conservative investors were solicited to invest in such products through fraudulent misrepresentations and omissions of material facts, while actual risks were not accurately and fully disclosed to investors. Victims of such include retired firefighters, school teachers and many others.
A common theme among all investors was brokers often stating that such investments were as safe and secure as a de-facto government backed bond, when, in reality, such was not the case. Preferred stocks of Fannie Mae and Freddie Mac carried significant risks which were simply never disclosed to investors. Preferred stocks are much more volatile than bonds and have characteristics that make them unique and much riskier than the guaranteed status of Corporate Bonds, as they were often pitched to be. Preferred stockholders stand behind bond holders in line for the company's assets if, and when it should run into a financial problem. This added extreme default risk to the holders of Fannie and Freddie preferred stock, a risk which was often not disclosed to investors. Further, Fannie Mae and Freddie Mac could have (and indeed did) eliminated preferred dividend payments, a material disclosure fact related to the investment in a product for income purposes.
In March of 2008, Fitch Ratings downgraded Fannie Mae's preferred stock rating; eventually the securities rating would be downgraded by Moody's to the lowest investment grade credit rating in August of 2008. Further, on, or around, September 8, 2008, United States Treasury Secretary Henry Paulson announced that Fannie Mae and Freddie Mac would be placed under conservatorship, eliminating all future dividend payments, resulting in the preferred stocks becoming essentially worthless. Fannie Mae and Freddie Mac preferred stock was promoted by investment firms even in the face of the companies' plummeting financial condition. Firms, including Merrill Lynch, earned more than one-third of a billion dollars in fees between November 2007 and June 2008 in relation to such securities. Investors saw their investments become essentially worthless with the deepening of the U.S. housing crisis.
If you were a victim of such impropriety and have sustained substantial losses by investing in Fannie Mae and/or Freddie Mac Preferred Securities, you may be entitled to recover damages. Please contact the Law Offices of Stuart D. Meissner LLC, which is nationally known for its record win statistics in FINRA Arbitration and has pursued and settled numerous similar cases on behalf of investors, toll-free at 866-764-3100 for a free consultation and to explore your legal rights and options.