Judge dismisses Fannie Mae lawsuit |
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Published
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Thu, 31 May 2007 21:23
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WASHINGTON (AP) - Shareholders may not sue on behalf of mortgage giant Fannie Mae to force changes to its governing policies and recover money lost during a $6 billion accounting scandal, a federal judge ruled Thursday.The lawsuit sought to hold Fannie Mae board members and former executives personally responsible for manipulating earnings figures to trigger huge bonuses.Investors hoped that a so-called derivative lawsuit -- in which shareholders sue in the company's name -- would force former CEO Franklin D. Raines, former CFO J. Timothy Howard and others to repay Fannie Mae their bonuses and severance packages.The lawsuit also sought to tighten internal controls at the nation's No. 1 mortgage lender. Shareholders wanted the company to rotate auditing firms, limit stock selling by executives and change the compensation structure.But U.S. District Judge Richard J. Leon dismissed the derivative lawsuit because the shareholders did not first petition Fannie Mae to, as a company, sue its board members and executives.The ruling does not affect a class-action shareholder lawsuit against Fannie Mae executives for securities violations or an effort by the Office of Federal Housing Enterprise Oversight to recoup money from Raines, Howard and others.Shares of Fannie Mae were trading down 33 cents at $63.76 in late trading on the New York Stock Exchange.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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