Freddie Mac and Fannie May Drop After They Delist Their Shares from New York Stock Exchange

Fannie Mae dropped 39% to 56 cents and Freddie Mac went down 38% to 75 cents when the mortgage firm delisted their preferred and common shares from the New York Stock Exchange at the request of the Federal Housing Finance Agency. The moves were ordered after the NYSE told Fannie Mae that its shares did not meet listing standards any longer because over the last 30 days its closing price had dropped under $1. The voluntary delistings will go into effect in early July. The companies are expected to trade on the Over-the-Counter Bulletin Board.

The two mortgage companies, which are 80% owned by US taxpayers, guarantee or own nearly half of the US’s $11 trillion mortgage market. Shareholders include Blackrock Inc., Vanguard Group, California’s state pension fund, and Kinetics Asset Management.

The two firms have been at risk of delisting since September 2008 when they were seized by regulators and their share prices dropped. The US Treasury has infused about $145 billion ($61.3 billion into Freddie Mac and $83.6 billion into Fannie Mae) into the companies since then to keep them afloat despite defaults of mortgages and foreclosures. Taxpayer aid could end up reaching the hundreds of billions of dollars. The US government has promised to keep financially supporting the mortgage firms while Congress deliberates over overhauling the country’s mortgage finance system. The two firms are still a key source of funding for mortgage lenders and banks.

“This is more insult to the injury sustained by those who were sold shares, especially preferred shares, of Fannie Mae and Freddie Mac,” says Securities Fraud Attorney William Shepherd. “Most investors were told that these were very safe investments. Many were told that these were as safe as government bonds. It is not too late to seek damages for such misrepresentations.”

Related Web Resources:
Fannie, Freddie Plunge After Moving to Delist Shares, Bloomberg, June 16, 2010
Fannie Mae, Freddie Mac to delist from NYSE, CNN, June 16, 2010
Contact our stockbroker fraud law firm to explore whether you have grounds for a case.

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