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Fannie Mae, Freddie Mac Plunge After Court Ruling on Profit

Fannie Mae and Freddie Mac plunged in New York trading after investors including Bruce Berkowitz’s Fairholme Capital Management LLC lost a legal bid yesterday to force the bailed-out companies to share profits with private shareholders.

Fannie Mae fell 29 percent to $1.92 at 11:10 a.m. Freddie Mac dropped 26 percent. Their preferred shares, which drew investments from private-equity and hedge funds, also tumbled, with one series plummeting 54 percent. The mortgage giants had surged for more than two years on speculation that shareholder rights to the earnings could be restored.