Major Wall Street banks that served as underwriters when Fannie Mae sold its stock, managed to get a major case that shareholders filed against them dismissed, according to Reuters.
The banks were initially accused of not being forthright about risky home loans linked to Fannie Mae.
In one of the individual actions, Comprehensive Investment Services (CIS) sued banks that handled the underwriting of CIS’s acquisition of $600,000 shares of Fannie Mae’s Series T Preferred Stock from Wachovia Securities for $15 million. Underwriters to the transaction included Wachovia Capital Markets and Citigroup Global Markets.
The allegations center around the shareholders’ belief that underwriters made material misstatements about Fannie Mae’s subprime and Alt-A exposures, risk management controls and core capital financials. United States District Judge Paul Crotty in Manhattan dismissed the cases filed against underwriters this week. Click here to read more.