Fannie Mae 2008 Annual Report Download - page 77

it makes allegations similar to those in the Arthur Derivative Litigation that was filed in November 2007 and
described above. Specifically the complaint contends that the current and former Fannie Mae officer and
director defendants irresponsibly engaged in “highly speculative real estate transactions” and concealed the
extent of the Company’s exposure to the subprime mortgage crisis, while wasting Company assets by causing
it to repurchase its own shares at inflated prices at the same time that certain defendants sold their personally
held shares. Based upon these allegations, the complaint asserts causes of action against the current and
former Fannie Mae officer and director defendants for breach of fiduciary duty, indemnification, negligence,
unjust enrichment and violations of Section 304 of the Sarbanes-Oxley Act of 2002.
In addition, Mr. Agnes asserts a direct claim on his own behalf under Section 14(a) of the Securities Exchange
Act of 1934 and SEC Rule 14a-9 based upon allegations that the Company’s 2008 Proxy Statement was
intentionally false and misleading and concealed material facts in order that members of the Board could
remain in control of the company.
The complaint seeks a declaration that the current and former officer and director defendants breached their
fiduciary duties; a declaration that the election of directors pursuant to the 2008 Proxy Statement is null and
void; a new election of directors; an accounting for losses and damages to us as a result of the alleged
misconduct; disgorgement; unspecified compensatory damages; punitive damages; attorneys’ fees, and other
fees and costs; as well as injunctive relief directing us to reform our corporate governance and internal control
procedures. On October 17, 2008, FHFA, as conservator for Fannie Mae, intervened in this action and filed a
motion to stay. On October 20, 2008, the Court issued an order staying this case until January 6, 2009. On
January 18, 2009, the Court entered an order extending the time for all defendants, except Washington Mutual,
Inc., to respond to the complaint through May 5, 2009. On February 2, 2009, FHFA filed a motion to
substitute itself for Mr. Agnes with respect to Mr. Agnes’ derivative claims, and to consolidate Mr. Agnes’
direct claim with those in In re Fannie Mae Securities Litigation described above. On February 13, 2009,
Mr. Agnes filed an opposition to FHFA’s motion to substitute.
ERISA Actions
In re Fannie Mae ERISA Litigation (formerly David Gwyer v. Fannie Mae)
On October 14, 2004, David Gwyer filed a proposed class action complaint in the U.S. District Court for the
District of Columbia. Two additional proposed class action complaints were filed by other plaintiffs on May 5,
2005 and May 10, 2005. These cases are based on the Employee Retirement Income Security Act of 1974
(“ERISA”) and name us, our Board of Directors’ Compensation Committee and certain of our former and
current officers and directors as defendants. These cases were consolidated on May 24, 2005 in the
U.S. District Court for the District of Columbia and a consolidated complaint was filed on June 16, 2005. The
plaintiffs in this consolidated ERISA-based lawsuit purport to represent a class of participants in our
Employee Stock Ownership Plan (“ESOP”) between January 1, 2001 and the present. Their claims are based
on alleged breaches of fiduciary duty relating to accounting matters. The plaintiffs seek unspecified damages,
attorneys’ fees, and other fees and costs, and other injunctive and equitable relief. On June 29, 2005,
defendants filed a motion to dismiss, which the Court denied on May 8, 2007. On July 23, 2007, the
Compensation Committee of our Board of Directors filed a motion to dismiss, which the Court denied on
July 17, 2008.
On October 17, 2008, FHFA intervened in the consolidated case (as well as in the consolidated shareholder
class action and the shareholder derivative lawsuits pending in the U.S. District Court for the District of
Columbia) and filed a motion to stay those cases. On October 20, 2008, the Court issued an order staying the
cases until January 6, 2009. Upon expiration of the stay, discovery in those cases resumed.
Moore v. Fannie Mae, et al.
On October 23, 2008, Mary P. Moore filed a proposed class action complaint in the U.S. District Court for the
District of Columbia against our Board of Directors’ Compensation Committee, our Benefits Plans Committee,
and certain current and former Fannie Mae officers and directors. This case is based on ERISA. Plaintiff
alleges that defendants, as fiduciaries of Fannie Mae’s ESOP, breached their duties to ESOP participants and
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