FHFA Orders Fannie, Freddie to Delist Stock from NYSE

Thu, Jun 17, 2010


By: Carrie Bay

The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to delist their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange.

“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” said FHFA Acting Director Edward J. DeMarco.

Both companies’ common stock price has hovered near the NYSE minimum average closing price requirement of $1 for more than 30 trading days for most months since Fannie and Freddie were placed into conservatorships in September 2008.

For the past 30 trading days, Fannie Mae’s closing stock price has dropped below the required $1 average price. Per NYSE rules, a company in that condition must either drop from the exchange or undertake a ‘cure’ to restore the stock price above the $1 mark. But FHFA says the alternatives for such a cure do not assure that the minimum price level will be maintained or shareholder value will not be lost.

Freddie Mac’s share price has been treading very close to the $1 mark, and FHFA says because both GSEs are operating under its conservatorship and relying on taxpayer support, the agency decided that Freddie Mac should also initiate delisting procedures.

“FHFA’s determination to direct each company to delist does not constitute any reflection on either enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator,” DeMarco said. “The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies.”

The GSEs’ stock will continue to trade, but through a different trading mechanism, FHFA said. Once the delisting is completed – which should be by early July – each company’s common and preferred stock will be quoted on the Over–the-Counter Bulletin Board (OTCBB).

Both GSEs’ stock prices dropped nearly 40 percent on Wednesday.

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