Fannie Mae 2014 Annual Report Download - page 71

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Bank of Scotland Group PLC and certain related entities and individuals, and is pending in the U.S. District Court for the
District of Connecticut. Both lawsuits were filed on September 2, 2011. These two remaining lawsuits seek to recover losses
we and Freddie Mac incurred on the private-label mortgage-related securities the defendants sold to us and Freddie Mac. The
lawsuits allege that the defendants violated federal and state securities laws by making material misstatements and omissions
regarding the characteristics of the loans underlying the securities in the offering documents for the securities that were sold
to Fannie Mae and Freddie Mac. The complaints seek, among other things, rescission and recovery of consideration paid for
the securities at issue in the lawsuits, monetary damages and interest.
Senior Preferred Stock Purchase Agreements Litigation
Between June 2013 and August 2014, several lawsuits were filed by preferred and common stockholders of Fannie Mae and
Freddie Mac in the U.S. Court of Federal Claims, the U.S. District Court for the District of Columbia and the U.S. District
Court for the Southern District of Iowa against the United States, Treasury and/or FHFA, challenging actions taken by the
defendants relating to the senior preferred stock purchase agreements and the conservatorships of Fannie Mae and Freddie
Mac. Some of these lawsuits also contain claims against Fannie Mae and Freddie Mac. The legal claims being advanced by
one or more of these lawsuits include challenges to the net worth sweep dividend provisions of the senior preferred stock that
were implemented pursuant to the August 2012 amendments to the agreements, as well as to FHFA’s decision to require
Fannie Mae and Freddie Mac to draw funds from Treasury in order to pay dividends to Treasury during conservatorship. The
plaintiffs seek various forms of equitable and injunctive relief, including rescission of the August 2012 amendments, as well
as damages. On September 30, 2014, the U.S. District Court for the District of Columbia dismissed all but one of the cases
pending before that court. The plaintiffs in each of the dismissed cases have filed a notice of appeal. The plaintiffs in the case
that was not dismissed by the court voluntarily dismissed their lawsuit on October 31, 2014. On February 3, 2015, the U.S.
District Court for the Southern District of Iowa dismissed the single case pending before it. The matters where Fannie Mae is
a named defendant are described below or in “Note 19, Commitments and Contingencies.”
Fannie Mae is a nominal defendant in two actions filed against the United States in the U.S. Court of Federal Claims: Fisher
v. United States of America, filed on December 2, 2013, and Rafter v. United States of America, filed on August 14, 2014.
Plaintiffs in these cases allege that the net worth sweep dividend provisions of the senior preferred stock that were
implemented pursuant to the August 2012 amendment to the senior preferred stock purchase agreement constitute a taking of
Fannie Mae’s property without just compensation in violation of the U.S. Constitution. The Fisher plaintiffs are pursuing this
claim derivatively on behalf of Fannie Mae, while the Rafter plaintiffs are pursing the claim directly against the United
States. Plaintiffs in Rafter also allege a derivative claim that the government breached an implied contract with Fannie Mae’s
Board of Directors by implementing the net worth sweep dividend provisions. Plaintiffs in Fisher request just compensation
to Fannie Mae in an unspecified amount. Plaintiffs in Rafter seek just compensation to themselves on their constitutional
claim and payment of damages to Fannie Mae on their derivative claim for breach of an implied contract. The United States
filed a motion to dismiss the Fisher case on January 23, 2014; however, the court has stayed proceedings in this case until
discovery in a related case, Fairholme Funds v. United States, is complete and the court sets a date for the Fairholme
plaintiffs to respond to the government’s motion to dismiss filed in that case. In the Rafter case, the court has ordered the
government to file a response to the complaint within sixty days after discovery is complete in the Fairholme Funds case.
LIBOR Lawsuit
On October 31, 2013, Fannie Mae filed a lawsuit in the U.S. District Court for the Southern District of New York against
Barclays Bank PLC, UBS AG, The Royal Bank of Scotland Group PLC, The Royal Bank of Scotland PLC, Deutsche Bank
AG, Credit Suisse Group AG, Credit Suisse International, Bank of America Corp., Bank of America, N.A., Citigroup Inc.,
Citibank, N.A., J.P. Morgan Chase & Co., J.P. Morgan Chase Bank, N.A., Coöperative Centrale Raiffeisen-Boerenleenbank
B.A., the British Bankers Association (“BBA”) and BBA LIBOR Ltd. alleging they manipulated LIBOR. On October 6,
2014, Fannie Mae filed an amended complaint alleging, among other things, that the banks submitted false borrowing costs
to the BBA in order to suppress LIBOR. The amended complaint seeks compensatory and punitive damages based on claims
for breach of contract, breach of the implied duty of good faith and fair dealing, unjust enrichment, fraud and conspiracy to
commit fraud. The defendants filed motions to dismiss the lawsuit on November 5, 2014.
Item 4. Mine Safety Disclosures
None.