In its roles as conservator for Freddie Mac and Fannie Mae, the
Federal Housing Finance Agency (FHFA) filed securities lawsuits against 17
financial entities in federal court as well as in the state courts of
Connecticut and New York in early September 2011. In the lawsuits the FHFA
alleges that the financial institutions, which range from Bank of America and
Citigroup to Deutsche Bank and Credit
Suisse, violated numerous federal securities and common laws in their sales of
mortgage-backed securities. Citing the Securities Act of 1933, the FHFA seeks
both civil penalties and damages.
According to an FHFA press release, Bank of America and its
fellow financial institutions committed a breach of fiduciary duty when they provided
Fanny May and Freddie Mac with misleading loan descriptions. These
descriptions, which were part of sales and marketing materials, failed to
reveal the true character of the loans, particularly their risk factors. In
other words, they constituted banking fraud.
The current FHFA lawsuit is part of a continuing effort on
the part of Congress and regulators to deal with institutions that engaged in
practices that precipitated the financial crisis of 2008, a crisis in which
risky mortgage-backed securities played an important role. The Washington Post estimates that almost
$200 billion in risky securities were sold to Freddie Mac and Fannie Mae.
Regardless of possible negative effects on the financial
sector and on the recovery process of the housing market, the government appears
to be stepping up its efforts to recover the financial losses investors
incurred during the 2008 crisis. These recent FHFA lawsuits are comparable to
an earlier lawsuit in 2011 which the FHFA filed against UBS Americas, Inc.
If you believe that you have
experienced investment loss due to the misleading marketing practices of a
banking institution, contact an investment recovery lawyer in San Diego today
at Carlson Law.
- Principal Protected Notes, Lehman Brothers and UBS Financial Services Arbitrations (securities-fraud-lawyer-blog.com)
- Halliburton Class Action for Securities Fraud, Case Reinstated – a Victory for Claimants (securities-fraud-lawyer-blog.com)
- Ambac & Others Agree to Pay $33M to Settle Fraud Allegations Surrounding Bond/Insurance Litigation (securities-fraud-lawyer-blog.com)
- Performance Fee Thresholds for Investors to be Raised by the SEC (securities-fraud-lawyer-blog.com)
- FINRA CEO Says Brokers Must “Push and Pull” for Private Placement Information (securities-fraud-lawyer-blog.com)