Fannie Mae Preferreds
Fannie Mae Preferreds, Freddie Mac Preferreds Fail
“Buy preferred stock. You can never go wrong.” As Fannie Mae preferreds and Freddie Mac preferred shareholders know, that mantra is far from true.
While investors with preferred stock shares may rate higher in the payout structure than common share holders if the issuing company files for bankruptcy protection, preferred share investments still face considerable risks. Preferred shares are subject to market changes and can lose value almost overnight. Two good examples of preferred shares gone bad are Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac were major issuers of preferred stock shares – that is until their financial collapse in 2008. The demise of Fannie and Freddie has since been tied to their propensity for risky lending, over-the-top leverage and investments in toxic derivative products.
Meanwhile, Fannie Mae and Freddie Mac preferred share investors have lost big on investments they thought to be safe and conservative. Many investors believed the government would protect them because Fannie Mae and Freddie Mae were considered government-sponsored enterprises. How did they arrive at such a conclusion? They listened to and believed the brokers who sold them on the supposed safety of Fannie Mae and Freddie Mac preferred shares.
In many of the lawsuits that have since been filed over Fannie Mae and Freddie Mac preferred shares, investors accuse their brokers of misrepresenting Fannie Mae and Freddie Mac and failing to disclose the truth about the deteriorating financial health of the two mortgage giants.
If you are an institutional or retail investor and were misled about Fannie Mae or Freddie Mac preferred shares, please contact us. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).