|
Frequently Asked Questions and Answers The SEC Settlement with Fannie Mae Eligibility For a Payment
Questions about the Proof of Claim Form
After Your Proof of Claim is Submitted
Effect of Submitting a Proof of Claim
Getting More Information The SEC Settlement with Fannie Mae 1. What are the details of the SEC's Settlement with Fannie Mae? The U.S. Securities and Exchange Commission ("SEC") alleged that between 1998 and 2004, Fannie Mae issued materially false and misleading financial statements in various reports and in filings with the SEC. You can read the Complaint filed by the SEC against Fannie Mae at the Case Documents link of this website. As part of the resolution of these claims, Fannie Mae previously paid approximately $350 million into the SEC Fannie Mae Settlement Fund. On April 16, 2007, United States District Court Judge Richard J. Leon approved a plan for distributing the Settlement Fund to select Fannie Mae investors that suffered losses during the Recovery Period — January 14, 1999 through the close of markets on December 22, 2004. (the “Distribution Plan”). The Distribution Plan provides that eligible investors whose valid Proof of Claim Forms were received on or before July 26, 2007, are entitled to receive compensation from the Settlement Fund. The investor claims procedure and payment on claims will be handled by the Court-appointed Distribution Agent. Eligibility for a Payment 2. Who is eligible for a payment from the Settlement Fund? The Distribution Plan provides that investors who purchased shares of Fannie Mae common stock (FNM) between January 14, 1999 and December 22, 2004, or Class N preferred stock (FNMprN) between September 25, 2003 and December 22, 2004, are eligible to make a claim for a payment from the SEC Fannie Mae Settlement Fund. 3. Are there exceptions to being eligible? Yes. Even if you purchased Fannie Mae common or Class N preferred stock in the time periods listed above, you are not eligible to make a claim for a payment if you:
4. Do I have to prove I suffered a monetary loss on my purchases of Fannie Mae stocks to be eligible? No, you do not need to prove you had a loss on your Fannie Mae stocks. If you submit your Proof of Claim, the Distribution Agent will compute your eligible loss (if any) for you. 5. I was a Fannie Mae employee and acquired shares through one or more employee programs. Do the shares qualify me for a payment? It depends on the program. See below:
Note that you will need to provide documentation for each purchase, including the date of purchase and the number of shares. If fractional shares were purchased, round to the nearest whole share. Click here for additional information on Fannie Mae Employee Stock Purchases 6. I purchased shares by reinvesting dividends. Do those purchases qualify? Yes. Note that you will need to provide documentation for each purchase, including the date of purchase and the number of shares. If fractional shares were purchased, round to the nearest whole share. 7. What is considered my official date of purchase (or sale) of my shares of stock? The date to use for your stock purchases and stock sales is “the Trade Date”. Many broker transaction statements provide both a Trade Date and a Settlement Date. The Trade Date is the correct date to use for purposes of completing a Proof of Claim Form. Note that the method of paying for the shares, or the timing of payments made for the shares, does not matter. The Trade Date controls. 8. Why aren’t other classes of Fannie Mae preferred stock or mortgage-backed or debt securities included in the Settlement? The Distribution Plan approved by the Court includes only common stock or Class N preferred stock. Using the best information available and economic analysis, the majority of investors’ losses occurred in these securities. All bondholders were excluded because Fannie Mae’s bonds were numerous and the vast majority of the trading in these bonds was not reported, making it impossible to reasonably estimate the effect of the alleged fraud on the specific bonds. 9. If I sold all of my stock prior to September 22, 2004, does that mean that I am ineligible? No, you are eligible to file for the settlement if you purchased Fannie Mae common stock between January 14, 1999 and December 22, 2004 or Fannie Mae preferred stock between September 25, 2003 and December 22, 2004. However, according to the terms of the settlement, there is no recognized loss per share if all of your stock was sold before September 22, 2004 and you no longer owned any after that date. This is because you bought and sold your stock during the period when the effect of the alleged fraudulent conduct remained embedded in the share price, and therefore under the Distribution Plan, any losses you incurred are deemed not to have been caused by the alleged fraud. Accordingly, you are allowed to file, but there would be no recognized loss or compensation in this case. You can read more about this in Appendices I and II of the Distribution Plan. 10. I inherited (or received as a gift) Fannie Mae shares. Am I eligible to file a claim? Your eligibility is dependent upon when the shares were originally purchased. If the original owner purchased the shares during the qualifying time period, then you can file a claim for those inherited or gifted shares. You must include copies of broker statements or other documentation of the original purchase with your claim. In addition, include documentation of the transfer of the shares to you, such as the broker statements for the period in which the transfer occurred. In the case of an inheritance, you should attach copies (please do not send originals) of any legal documentation showing you are the legal recipient of these shares. If the original owner purchased the shares prior to the qualifying time period, the shares would not be eligible. 11. Am I eligible if I purchased common stock before January 14, 1999 or after December 22, 2004, or Class N preferred stock before September 25, 2003 or after December 22, 2004? No, you will not be eligible for a payment on those shares. The Distribution Plan approved by the Court provides that only common stock purchased between January 14, 1999 and December 22, 2004, and Class N preferred stock purchased between September 25, 2003 and December 22, 2004 are eligible securities. Questions About the Proof of Claim Form 12. What is the deadline for submitting the Proof of Claim Form? The deadline for filing a claim has passed. If you have questions about a claim please call 1-800-760-6903. 13. Did I need to submit supporting documents with my Proof of Claim Form? Yes. You must have sent copies (not originals) of documents that show your beginning and ending positions, and your purchases and sales of Fannie Mae common stock and Class N preferred stock with your completed Proof of Claim Form. The types of documents that support your claim could include (but aren’t limited to):
If you did not submit documents with your claim form, we will not be able to validate your claim. You will receive a letter in September explaining what is missing and you will be able to submit your documentation. 14. What if I cannot provide all the supporting documents with my Proof of Claim Form? It is very important that you provide copies of documents that support the positions and transactions listed on your Proof of Claim Form. We will not be able to validate your claim without them. If you cannot locate these documents within your personal records, you should contact your broker or other account representative and request copies of the documents you need. 15. My broker is unable or unwilling to provide copies of the statements I need (and I cannot locate the statements within my personal records). What should I do? If you cannot locate the required documentation, please call our toll-free number, 800-760-6903, for additional assistance. 16. Will the information I send be kept confidential? Yes. The Distribution Agent will protect the privacy of the information you provide. The information in your Proof of Claim Form and your supporting documents will be used only to process your claim and issue a payment. 17. Why does the Proof of Claim Form ask for my phone number and email address? The Distribution Agent might need more information in order to process your Proof of Claim Form. The Proof of Claim Form asks for your phone number and email address so you can be contacted more promptly if additional information is needed. 18. I purchased eligible stocks, but they were held in my broker’s name. Who should complete the Proof of Claim Form? The beneficial owner of the eligible stocks should complete the Proof of Claim Form. If you purchased the stocks but they were registered in your broker’s name, you are the beneficial owner. 19. I held eligible stocks in more than one account. Should I file separate Proof of Claim Forms? You should include all of your eligible purchases on one Proof of Claim Form, even if they were purchased or held with different brokers or representatives. 20. I participated in a Fannie Mae stock purchase program that resulted in numerous monthly purchases and/or numerous quarterly dividend reinvestments. How should I proceed in filing a claim? If your trade documentation contains transaction information for all of your share acquisitions, whether by periodic purchase or dividend reinvestment, you may write “see attached” where the share information is requested on pages 2 and 3 of the Proof of Claim Form, and provide us with copies of all applicable transaction statements. We will then process your claim based on the information on those statements and we will notify you if we require additional information. 21. If I have a co-owner on the stocks, do we both need to sign the Proof of Claim Form? Yes, all owners must sign. However, if your co-owner is deceased, please read the next question below. 22. What should I do if the investor has died? How should the Proof of Claim Form be completed? If there is only one investor and that investor has died, the executor or administrator of the estate should sign the Proof of Claim Form and add his or her title (for example, “Executor of the Estate of John Doe”). If no estate was opened, or the estate is now closed, all the legal heirs of the investor should sign their names on the Release Form, and add the word “Heir”. In either circumstance, you should attach copies (please do not send originals) of any legal documentation showing you are the executor or administrator of the estate, or the legal heir of the deceased. If you had a co-owner who has died, you should sign the Proof of Claim Form yourself, and send copies of documents that show:
After Your Proof of Claim is Submitted 23. Will I be notified whether my claim is accepted or rejected? Yes. Determination Notices informing you of the status of your claim were mailed in September. If your claim was rejected, an explanation was provided and you were allowed to request that your claim be reconsidered. 24. How much will I be paid if I am eligible? If you are eligible, the amount of your payment depends on the number of shares you purchased and sold, and when you made your purchases and sales. Your payment is based on your “Eligible Loss Amount”, which was calculated by first applying an “artificial inflation” amount (the amount of price inflation caused by the alleged violations) based on the date of each of your eligible purchases of common or Class N preferred stock. Next, if the stock was later sold, a separate “artificial inflation” amount for the date of sale was subtracted in order to arrive at a loss per share amount. The artificial inflation amounts were developed by an expert economist at the SEC and approved by the Court. Your eligible loss per share was computed for all shares, and added together to arrive at your total eligible loss amount. Any eligible losses less than $10.00 will not be paid. Please note that since the total amount of money due to eligible claimants exceeded the available distribution, the funds were distributed pro rata to all eligible claimants. Due to the volume of claims filed, payments were calculated at 3.9% of Eligible Loss Amounts. You can read a more detailed explanation of how payment amounts were calculated and view the artificial inflation tables in the Appendices of the Distribution Plan on this website. 25. When will I receive my payment? By Order dated October 15, 2007, the Court directed the Distribution Agent to pay all validated claims in the SEC Fannie Mae Settlement. The checks were mailed on Friday, October 19, 2007. You will be notified by letter is your loss does not meet the $10 minimum or your claim is not eligible for another reason and you have not been previously notified. For security reasons, payment amounts cannot be provided over the phone. If you do not receive a check (or a letter) within two weeks of the mailing date, please call the SEC Fannie Mae Settlement call center toll-free at 1-800-760-6903. 26. Will I have to pay taxes on my payment? You will receive information from the Settlement’s Tax Administrator with your check. However, whether any payment you receive is taxable will depend on your own individual tax circumstances. We cannot give you tax or other legal advice on this matter. If you have tax questions, you should contact a local tax preparer or advisor. 1099 Forms will not be issued for the Settlement. 27. What should I do if I move after I send in my Proof of Claim Form? If you move after you file your Proof of Claim, be sure to provide your new address to ensure that you receive your payment. You can update your address by calling 1-800-760-6903, sending an email to mail@SECFannieMaeSettlement.com, or writing to:
Effect of Submitting a Proof of Claim 28. Am I giving up any legal rights by filing a Proof of Claim Form? No. By submitting a Proof of Claim and receiving a payment, you are not giving up any legal rights, including any rights or claims you may have against Fannie Mae and its past and present directors, officers or agents. 29. If I submit a claim, can I still sue or join a class action against Fannie Mae? Yes. Because you are not giving up any legal rights by submitting a claim, you may, if you wish, file your own lawsuit or participate in a class action lawsuit against Fannie Mae about any claims you may have, including any claims relating to your purchases of common stock or Class N preferred stock. 30. Isn’t this case a class action? No. This Settlement is the result of a civil enforcement action filed by the U.S. Securities and Exchange Commission ("SEC"), which is a part of the federal government. Class action lawsuits are generally filed by private lawyers. In a class action lawsuit, one or more people sue on behalf of other people who have similar claims, and if a class is allowed by the court, whatever is decided applies to everyone in the class. You can participate in a class action independently from this SEC Settlement. 31. What should I do if I decide I do not want to submit a Proof of Claim? Your participation in the SEC Fannie Mae Settlement is voluntary. If you do not want to participate and receive a payment, do not complete or send in a Proof of Claim Form. Nothing else is required. But remember, if you do not send in a Proof of Claim, you will not be eligible to receive a payment from the Settlement Fund. Getting More Information 32. I still have some questions. Who can I contact? If you have additional questions, you may:
|
|||||||||
| Our toll free number is 1-800-760-6903. Call center hours are 9:00 a.m. until 7:00 p.m. Eastern time, Monday through Friday. |
