Fannie Mae investors seek compensation
Fannie Mae investors should be entitled to about $10 billion in compensation for losses stemming from accounting manipulation at the mortgage finance company, Ohio Attorney General Marc Dann said yesterday .
"It was not until the fall of 2005 that people had an actual sense of the magnitude of the restatement," Dann said in an interview after a hearing in US District Court in Washington. Fannie Mae, the largest source of money for US home loans, completed a restatement in December of earnings from 2001 through June 2004.
Federal investigators accused former company executives of overstating earnings by $6.3 billion in order to trigger annual bonuses. Dann's estimate of what Fannie Mae should pay investors is almost double the $5.3 billion the Washington-based company spent on administrative expenses in 2005 and 2006 combined, largely to fix accounting controls.
Dann represents two Ohio pension funds that are lead plaintiffs in shareholder lawsuits against the government-chartered company and three former executives. Fannie Mae shares traded above $77 in September 2004 before regulators began revealing the accounting errors, and fell below $42 by October 2005.
