Fannie Mae 2009 Annual Report Download - page 385

In re Fannie Mae ERISA Litigation
In a consolidated complaint filed on June 15, 2005, plaintiffs David Gwyer, Gloria Sheppard, and Terry
Gagliolo allege that we and certain former officers and directors, as well as the Compensation Committee of
our Board of Directors, violated the Employee Retirement Income Security Act of 1974 (“ERISA”) 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 December 18, 2009, the parties reached an agreement in principle to settle the suit. The amount of the
settlement is not material.
2008 Class Action Lawsuits
Fannie Mae is a defendant in two consolidated class actions filed in 2008 and currently pending in the
U.S. District Court for the Southern District of New York—In re Fannie Mae 2008 Securities Litigation and In
re 2008 Fannie Mae ERISA Litigation. On February 11, 2009, the Judicial Panel on Multidistrict Litigation
ordered that the cases be coordinated for pretrial proceedings. On October 13, 2009, the Court entered an
order allowing FHFA to intervene in this case.
In re Fannie Mae 2008 Securities Litigation
In a consolidated complaint filed on June 22, 2009, lead plaintiffs Massachusetts Pension Reserves Investment
Management Board and Boston Retirement Board (for common shareholders) and Tennessee Consolidated
Retirement System (for preferred shareholders) allege that we, certain of our former officers, and certain of
our underwriters violated of Sections 12(a)(2) and 15 of the Securities Act of 1933. Lead plaintiffs also allege
that we, certain of our former officers, and our outside auditor, violated Sections 10(b) (and Rule 10b-5
promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934. Lead plaintiffs purport to represent
a class of persons who, between November 8, 2006 and September 5, 2008, inclusive, purchased or acquired
(a) Fannie Mae common stock and options or (b) Fannie Mae preferred stock. Lead plaintiffs seek various
forms of relief, including rescission, damages, interest, costs, attorneys’ and experts’ fees, and other equitable
and injunctive relief.
On July 13, 2009, we and the other defendants against whom the Securities Act claims were asserted filed a
motion to dismiss those claims. The Court granted this motion on November 24, 2009. On September 18,
2009, we and the remaining defendants filed motions to dismiss the Securities Exchange Act claims.
An individual plaintiff, Daniel Kramer, is seeking to have his Securities Act case heard in state court.
Although the Court denied his motion to remand his case to state court, Kramer moved for the court to certify
its ruling to the court of appeals for review. We opposed his motion, arguing that Kramer’s arguments on
appeal are insufficient to support reversal.
In re 2008 Fannie Mae ERISA Litigation
In a consolidated complaint filed on September 11, 2009, plaintiffs allege that certain of our current and
former officers and directors, including former members of Fannie Mae’s Benefit Plans Committee and the
Compensation Committee of Fannie Mae’s Board of Directors, as fiduciaries of Fannie Mae’s ESOP, breached
their duties to ESOP participants and beneficiaries by investing ESOP funds in Fannie Mae common stock
when it was no longer prudent to continue to do so. Plaintiffs purport to represent a class of participants and
beneficiaries of the ESOP whose accounts invested in Fannie Mae common stock beginning April 17, 2007.
The plaintiffs seek unspecified damages, attorneys’ fees and other fees and costs and injunctive and other
equitable relief. On November 2, 2009, defendants filed motions to dismiss these claims, which are now fully
briefed.
F-127
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)