The credit crisis and collapse of the sub-prime mortgage market has led to the collapse of both Fannie Mae and Freddie Mac, two of the largest issuers of preferred stock over the past decade. In turn, Wall Street has underwritten much of this debt and unloaded it on unsuspecting investors looking for income-generating investments that are consistent with their risk profile.
Zamansky LLC is representing investors including retirees and institutional investors such as endowments that purchased shares of Fannie Mae and Freddie Mac based on fraudulent information provided to them by their stock brokers.
Investors were led to believe these stocks were “conservative” and would provide steady income through above-average dividends. Moreover, investors were told that the Federal Government would assure that their investments were safe.
Millions of investors have seen their portfolios and retirement accounts devastated by the collapse of Fannie Mae and Freddie Mac, which should have been prevented. Brokers have a fiduciary responsibility to only recommend investments that are in line with a client’s risk tolerance and they should never over expose a client to single investment.
At a minimum, brokers should have convinced clients to diversify out of their Fannie Mae and Freddie Mac holdings as it became clear that the subprime mortgage crisis would have material effects on these two companies. Brokers that failed to protect their clients may have put their own commissions on stock purchases ahead of their client’s interests or were incompetent or negligent. On both accounts, brokers are likely to be held accountable for their actions through FINRA arbitration.
Zamansky LLC has already filed several claims on behalf of investors that lost money due to the collapse of Fannie Mae and Freddie Mac. We offer free consultations and ensure confidentiality.