Fannie Mae 2004 Annual Report Download - page 350

duty, waste, insider trading, fraud, gross mismanagement, violations of the Sarbanes-Oxley Act and unjust
enrichment. Plaintiffs seek compensatory damages, punitive damages, attorneys’ fees, and other fees, as well
as injunctive relief related to the adoption by us of certain proposed corporate governance policies and internal
controls.
All of these individual actions have been consolidated into the U.S. District Court for the District of Columbia
and the court entered an order naming Pirelli Armstrong Tire Corporation and Wayne County Employees’
Retirement System as co-lead plaintiffs. A consolidated complaint was filed on September 26, 2005. The
consolidated complaint named the following current and former officers and directors as defendants: Franklin
Raines, J. Timothy Howard, Thomas P. Gerrity, Frederick V. Malek, Joe K. Pickett, Anne M. Mulcahy, Daniel
H. Mudd, Kenneth M. Duberstein, Stephen B. Ashley, Ann Korologos, Donald B. Marron, Leslie Rahl, H.
Patrick Swygert and John K. Wulff.
When document production commenced in In Re Fannie Mae Securities Litigation, we agreed to simulta-
neously provide our document production from that action to the plaintiffs in the shareholder derivative action.
All of the defendants filed motions to dismiss the action on December 14, 2005. These motions were fully
briefed but not ruled upon. In the interim, the plaintiffs filed an amended complaint on September 1, 2006, thus
mooting the previously filed motions to dismiss. Among other things, the amended complaint adds Goldman
Sachs Group Inc., Goldman, Sachs & Co., Inc., Lehman Brothers Inc. and Radian Insurance Inc. as defendants,
adds allegations concerning the nature of certain transactions between these entities and Fannie Mae, adds
additional allegations from OFHEO’s May 2006 report on its special examination, the Paul Weiss report and
other additional details. We filed motions to dismiss the first amended complaint on October 20, 2006.
In Re Fannie Mae ERISA Litigation (formerly David Gwyer v. Fannie Mae)
Three ERISA-based cases have been filed against us, our Board of Directors’ Compensation Committee, and
against the following former and current officers and directors: Franklin D. Raines, J. Timothy Howard, Daniel
H. Mudd, Vincent A. Mai, Stephen Friedman, Anne Mulcahy, Ann McLaughlin Korologos, Joe K. Pickett,
Donald B. Marron, Kathy Gallo and Leanne Spencer.
On October 15, 2004, David Gwyer filed a class action complaint in the U.S. District Court for the District of
Columbia. Two additional class action complaints were filed by other plaintiffs on May 6, 2005 and May 10,
2005. All of these cases were consolidated on May 24, 2005 in the U.S. District Court for the District of
Columbia. A consolidated complaint was filed on June 15, 2005. The plaintiffs in the consolidated ERISA-
based lawsuit purport to represent a class of participants in our ESOP between January 1, 2001 and the
present. Their claims are based on alleged breaches of fiduciary duty relating to accounting matters discussed
in our SEC filings and in OFHEO’s interim report. Plaintiffs seek unspecified damages, attorneys’ fees, and
costs, and other injunctive and equitable relief. We filed a motion to dismiss the consolidated complaint on
June 29, 2005. Our motion and all of the other defendants’ motions to dismiss were fully briefed and argued
on January 13, 2006. As of the date of this filing, these motions are still pending.
Department of Labor ESOP Investigation
In November 2003, the Department of Labor commenced a review of our ESOP and Retirement Savings Plan.
The Department of Labor has concluded its investigation of our Retirement Savings Plan, but continues to
review the ESOP. We continue to cooperate fully in this investigation.
Restatement-Related Investigations by U.S. Attorney’s Office, OFHEO and SEC
U.S. Attorney’s Office Investigation
In October 2004, we were told by the U.S. Attorney’s Office for the District of Columbia that it was
conducting an investigation of our accounting policies and practices. In August 2006, we were advised by the
U.S. Attorney’s Office for the District of Columbia that it was discontinuing its investigation of us and does
not plan to file charges against us.
F-99
FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)