Wachovia sued over Fannie Mae securities

St.Louis Business Journal reports:

At issue are three May 13 sales of about $2 billion worth of preferred stock for the Federal National Mortgage Corp., generally known as Fannie Mae. The value of the sales was $6 billion. Wachovia underwrote the sale of at least 14.2 million shares, according to one of the suits, which would amount to more than $354 million of the total.

The suits contend Wachovia, and in some suits other financial institutions, failed to tell investors that Fannie Mae was inadequately capitalized. The suits say Fannie Mae would soon need to raise an additional $46 billion to be properly capitalized.

The shares that sold for $25 each in May were worth $2 per share on Oct. 6, according to one of the suits.

Fannie Mae sure is a sleazy operation.