Coughlin Stoia Files Suit on Behalf of Fannie Mae Investors
Plaintiffs securities law firm Coughlin Stoia Geller Rudman & Robbins filed suit against Fannie Mae just one day after its takeover by the government was announced.
The suit filed Monday claims four current and former Fannie Mae officials misrepresented the financial health of the company, Legal Times reports. The suit was filed on behalf of investors who held the mortgage company’s stock between November and last Friday. Another plaintiffs firm, Bernstein Litowitz Berger & Grossman, is also considering a suit, the Wall Street Journal reports.
Law professors told the Wall Street Journal that shareholder suits alleging securities violations have a better chance of success than a suit against the federal government for diluting the value of Fannie Mae stock in its takeover.
Duke law professor James Cox and other experts told the newspaper that two federal laws gave Treasury Secretary Henry Paulson explicit authority to bring Fannie Mae under government control. “I’m skeptical of whether plaintiffs are going to be able to make much” of the takeover, he said.
