|Court:||United States District Court for the District of Columbia|
|Case Number:||13-mc-1288 (RLW)|
|Case Leaders:||Salvatore J. Graziano, Adam H. Wierzbowski|
|Case Team:||Richard D. Gluck|
This is a consolidated class action brought on behalf of shareholders of Fannie Mae and Freddie Mac (the “Companies”), which have been under government conservatorship since 2008. The action challenges the “Net Worth Sweep,” whereby all of the Companies’ net income is paid to the federal government each quarter. The action alleges that the Net Worth Sweep violates shareholders’ contractual rights and seeks compensatory damages.
On February 21, 2017, BLB&G and the other Co-Interim Lead Counsel achieved an appellate victory when the D.C. Circuit Court of Appeals reversed and remanded the district court’s dismissal of the case. BLB&G subsequently filed a second amended complaint, which defendants again moved to dismiss. On September 28, 2018, the Court issued an order upholding plaintiffs’ claims for breach of the implied covenant of good faith and fair dealing.
The Parties engaged in and completed a substantial discovery process.
On December 7, 2021, the Court decided that this Action may be maintained as a class action with respect to claims asserted on behalf of three separate Classes, defined as:
(1) All current holders of junior preferred stock in Fannie Mae as of the date of certification, or their successors in interest to the extent shares are sold after the date of certification and before any final judgment or settlement (the “Fannie Preferred Class”);
(2) All current holders of junior preferred stock in Freddie Mac as of the date of certification, or their successors in interest to the extent shares are sold after the date of certification and before any final judgment or settlement (the “Freddie Preferred Class”); and
(3) All current holders of common stock in Freddie Mac as of the date of certification, or their successors in interest to the extent shares are sold after the date of certification and before any final judgment or settlement (the “Freddie Common Class”).
Excluded from all Classes are the Defendants, the United States Department of the Treasury, and their respective officers and directors. The “date of certification” for all three Classes was December 7, 2021. Thus, if you held the relevant securities as of December 7, 2021, you are a member of the applicable Class, unless you choose to opt out or unless you sell or have sold your shares after that date.
Please review the Notice of Class Action to learn about your rights in the class action. The certification of the Classes means that the ultimate outcome of the Action—whether favorable or unfavorable to the Classes or Defendants—will apply in like manner to each Class Member who does not timely elect to be excluded. There is no judgment, settlement, or monetary recovery at this time, and you are not being asked to submit a claim.
Motions for summary judgment are currently pending before the Court. The case is currently set for trial on October 17, 2022.
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