We believe that the credit crisis and total collapse of the sub-prime mortgage market has also led to the collapse of both Fannie Mae and Freddie Mac, two of the nation’s largest issuers of preferred stock.  As a result, Wall Street has underwritten much of this debt, nearly $6 billion, to unsuspecting investors.

Most investors were led to believe these stocks were conservative and would provide a steady income through above-average dividends.  Investors were also told that the Federal Government would assure that their investments were safe.

In July of 2008, the U.S. Federal Government provided Freddie Mac and Fannie Mae with an unlimited credit line at the U.S. Treasury, and authorized the U.S. Treasury to purchase equity shares in the two entities, if necessary. A little over a month later, in September of 2008, the U.S. Federal Government seized control of Freddie Mac and Fannie Mae in order to avoid a complete financial collapse.

Investors have seen their portfolios and retirement accounts depleted by the collapse of Fannie Mae and Freddie Mac.  All brokers have a responsibility to only recommend investments that are in line with their client’s risk tolerance and they should never over expose a client to single investment.

Brokers should have worked with their clients to diversify out of their Fannie Mae and Freddie Mac holdings as it became clear that the subprime mortgage crisis would have  effects on these two companies. 

If you feel your broker or brokerage failed to protect your portfolio by investing in Fannie Mae or Freddie Mac by putting their interests ahead of yours or because of incompetence or negligence, contact a Securities Arbitration Lawyer for a free consultation on how to recover your losses and hold your broker accountable.            To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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