Thursday, May 05, 2005

Fannie Employees Can't Trade Firms Stock

Fannie Mae issued a "blackout" barring employees from buying or selling stock. "Fannie Mae has barred its 5,000 employees from buying or selling company stock for the foreseeable future, as the mortgage finance giant moves ahead with a multibillion-dollar restatement and deals with federal investigations into its accounting practices."

It's odd that the report comes from internal emails and not a press release. "Fannie Mae told workers that the move is designed to protect them from inadvertently violating securities laws triggered when insiders trade while they are aware of material information that is not widely available in the market."

"The District-based company cited its 'inability to make public filings with the Securities and Exchange Commission, the increasing number of employees supporting our restatement effort, and the continuing progress of internal and external reviews and investigations' as a rationale for the ban. "

"It is possible that employees will gain access to data 'that has to do with the substance of the restatement, such as how good or bad it is going to be, things employees can pick up by what's going on in the halls.'"


At 10:25 AM, Blogger Melody said...

Can a company actually force this? You can only exercise this if you have a hardship? My initial reaction would be to sell if they told me not to. Why is that? More fun times ahead.

At 10:34 AM, Anonymous Anonymous said...

My father bought Fanny Mae before the start of the Housing Bubble back in 1996/1997/1998. I begged him to sell at the first whiff of scandal last fall. He finally sold everything two weeks ago. Thank God. He made a nice little profit over the years.

I told him it was better to bank his profit and pay the taxes instead of risking another Enron.

At 10:36 AM, Anonymous Anonymous said...

If they pick up on talk in the halls or around the drinking fountain, and then buy or sell based on that info, it could be considered insider trading.

At 10:50 AM, Anonymous Anonymous said...

It's a shame that it has to come to this. They should be shut down until they can come out with the required reports.

I think it's stupid to ban employees from selling. They could sue if the company goes belly up. And furthermore, anyone who buys the stock now, given that the company has no idea what it's doing, deserves to lose money. It's not like it's a big secret they were run by crooks and morons. It's not "insider" information anymore. It was "insider" when the CEO was taking all those big bonuses and retirement packages while cooking the books. Notice how once the cat is out of the bag the company gets religion? What a bunch of slime balls.

At 10:56 AM, Anonymous Rick said...

They could always buy Puts to protect themselves or have a friend do it if Fanny barred those transactions too.

At 11:18 AM, Anonymous Anonymous said...

Damm, its Enron all over again!

OC Pete

At 11:54 AM, Anonymous Anonymous said...

the only reason these two GSEs havent been shut down is because if they were, the entire national real estate market would utterly collapse within 24 hours.

and that would throw the US into a depression we haven't seen the likes of since the 1930s.

eventually, this will happen anyway, probably when greenspan and co try to "unwind" the assets of freddie and fannie.

if freddie or fannie were ANY other public company, the SEC would have long since raided them and taken their records away for evidence.

btw- freddie and fannie both admitted that up until 1999 or 2000, they did their entire accounting on an Excel spreadsheet. In other words, there has been no recordkeeping at freddie and fannie at all.

It's one gigantic freakin' fraud.

At 12:26 PM, Anonymous fanniefanniebobanny said...

Another reason why the government should get the hell out of the mortgage biz (whether literally or via the quasi-governmental FNM and FRE).

It's bad enough our tax code is used as a flotation device for real estate with the mortgage deduction, capital gain exemptions, etc.

This is the classic road to hell paved with good intentions.

My guess is that this move (to restrict stock buys/sells) at Fannie means some more bad news on the way.


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