Freddie Mac 2015 Annual Report Download - page 202

Legal Proceedings
Freddie Mac 2015 Form 10-K 200
LEGAL PROCEEDINGS
We are involved as a party to a variety of legal proceedings arising from time to time in the ordinary
course of business. See Note 15 for more information regarding our involvement as a party to various
legal proceedings. We discuss below certain litigation against the U.S. government concerning
conservatorship and the Purchase Agreement.
Over the last several years, a number of lawsuits have been filed against the U.S. government and, in
some cases, the Secretary of the Treasury and the Director of FHFA. These lawsuits challenge certain
government actions related to the conservatorship (including actions taken in connection with the
imposition of conservatorship) and the Purchase Agreement. Several of the lawsuits seek to invalidate the
net worth sweep dividend provisions of the senior preferred stock, which were implemented pursuant to
the August 2012 amendment to the Purchase Agreement. A number of cases have been dismissed.
Cases are currently pending in the U.S. Court of Federal Claims, the U.S. District Court for the Eastern
District of Kentucky, the U.S. District Court for the Northern District of Iowa, and the U.S. District Court for
the Northern District of Illinois. In addition, plaintiffs are appealing a September 2014 order by the U.S.
District Court for the District of Columbia to dismiss such parties’ cases in that Court. It is possible that
additional similar lawsuits will be filed in the future.
Freddie Mac is not a party to any of these lawsuits. However, a number of other lawsuits have been filed
against Freddie Mac concerning the August 2012 amendment to the Purchase Agreement. See Note 15
for information on the lawsuits filed against Freddie Mac. Pershing Square Capital Management, L.P.
(“Pershing”) is a plaintiff in one of the lawsuits filed against Freddie Mac. Pershing has filed reports with
the SEC, most recently in March 2014, indicating that it beneficially owned more than 5% of our common
stock. We do not know Pershing's current beneficial ownership of our common stock. For more
information, see “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters."
It is not possible for us to predict the outcome of these lawsuits (including the outcome of any appeal), or
the actions the U.S. government (including Treasury and FHFA) might take in response to any ruling or
finding in any of these lawsuits or any future lawsuits. However, it is possible that we could be adversely
affected by these events, including, for example, by changes to the Purchase Agreement, or any resulting
actual or perceived changes in the level of U.S. government support for our business.