Freddie Mac 2015 Annual Report Download - page 326

Financial Statements Notes to the Consolidated Financial Statements | Note 15
Freddie Mac 2015 Form 10-K 324
American European Insurance Company, Cacciapalle and Miller vs. Treasury and FHFA. This case was
filed as a shareholder derivative lawsuit, purportedly on behalf of Freddie Mac as a “nominal” defendant,
on July 30, 2014. The complaint alleged that, through the August 2012 amendment to the Purchase
Agreement, Treasury and FHFA breached their respective fiduciary duties to Freddie Mac, causing
Freddie Mac to suffer damages. The plaintiffs asked that Freddie Mac be awarded compensatory
damages and disgorgement, as well as attorneys’ fees, costs and other expenses.
FHFA, joined by Freddie Mac and Fannie Mae, moved to dismiss the In re Fannie Mae/Freddie Mac
Senior Preferred Stock Purchase Agreement Class Action Litigations case and the other related cases in
January 2014. Treasury filed a motion to dismiss the same day. In September 2014, the District Court
granted the motions and dismissed the plaintiffs’ claims. In October 2014, plaintiffs in the In re Fannie
Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations case filed a notice
of appeal of the District Court’s decision. The scope of this appeal includes the American European
Insurance Company shareholder derivative lawsuit. In October 2014, Arrowood filed a notice of appeal of
the District Court’s decision.
Litigation in the U.S. Court of Federal Claims
Reid and Fisher vs. the United States of America and Federal Home Loan Mortgage Corporation. This
case was filed as a derivative lawsuit, purportedly on behalf of Freddie Mac as a “nominal” defendant, on
February 26, 2014. The complaint alleges, among other items, that the net worth sweep dividend
provisions of the senior preferred stock constitute an unlawful taking of private property for public use
without just compensation. The plaintiffs ask that Freddie Mac be awarded just compensation for the U.S.
government’s alleged taking of its property, attorneys’ fees, costs and other expenses.
Rafter, Rattien and Pershing Square Capital Management vs. the United States of America et al. This
case was filed as a shareholder derivative lawsuit, purportedly on behalf of Freddie Mac as a “nominal”
defendant, on August 14, 2014. The complaint alleges that the net worth sweep dividend provisions of the
senior preferred stock constitute an unlawful taking of private property for public use without just
compensation, and the U.S government breached an implied-in-fact contract with Freddie Mac. In
September 2015, plaintiffs filed an amended complaint, which contains one claim involving Freddie Mac.
The amended complaint alleges that Freddie Mac’s charter is a contract with its common stockholders,
and that, through the August 2012 amendment to the Purchase Agreement, the U.S. government
breached the implied covenant of good faith and fair dealing inherent in such contract. Plaintiffs ask that
they be awarded damages or other appropriate relief for the alleged breach of contract as well as
attorneys’ fees, costs and expenses.
Litigation in the U.S. District Court for the District of Delaware
Jacobs and Hindes vs. FHFA and Treasury. This case was filed on August 17, 2015 as a putative class
action lawsuit purportedly on behalf of a class of holders of preferred stock or common stock issued by
Freddie Mac or Fannie Mae. The case was also filed as a shareholder derivative lawsuit, purportedly on
behalf of Freddie Mac and Fannie Mae as “nominal” defendants. The complaint alleges, among other
items, that the August 2012 amendment to the Purchase Agreement violated applicable state law and
constituted a breach of contract, as well as a breach of covenants of good faith and fair dealing. Plaintiffs
seek equitable and injunctive relief (including restitution of the monies paid by Freddie Mac and Fannie