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In Friday's complaint with the U.S. District
Court, Pershing Square alleged that the Department of the
Treasury illegally seized tens of billions of dollars in Fannie
and Freddie profits.
Pershing Square, the largest shareholder of both the mortgage
companies, said in the complaint that it was told the Fannie and
Freddie stockholders no longer have fundamental shareholders
rights.
Fannie's and Freddie's conservator, Federal Housing Finance
Agency (FHFA), denied "written demands by Pershing Square to the
companies' boards of directors for a books and records
inspection", according to the complaint.
In the second lawsuit, Pershing suggests the mortgage companies'
dividends being paid to the Treasury should be shared among
other common shareholders.
Three retirees who own Fannie Mae stock have joined as
plaintiffs of the lawsuit.
In a complaint filed on Thursday with the U.S. Court of Federal
Claims in Washington, D.C., Pershing accused the government of
violating the Fifth Amendment of the U.S. Constitution by taking
private property for public use without just compensation.
Though the lawsuits raise different legal theories and are in
different courts, they are both designed to enable Ackman to
recoup sums for the depressed value of his Fannie Mae and
Freddie Mac shares.
Pershing disclosed last November it had invested close to a
half-billion dollars for common share stakes of 9.98 percent in
Fannie Mae and 9.77 percent in Freddie Mac.
The alleged illegal "dividend sweep" were under way before this
disclosure.
In July 2013, investors such as hedge fund firm Perry Capital
LLC and Bruce Berkowitz's Fairholme Capital Management LLC, for
example, sued the government over Fannie and Freddie, which were
bailed out in September 2008 amid mounting mortgage losses.
Neither the Treasury Department, nor the FHFA were immediately
available for a comment.
Jones Day represents Pershing and the three individual
shareholders of Fannie and Freddie.
The case is Rafter et al v. Department of the Treasury et al,
U.S. District Court for the District of Columbia.
(Reporting By Kanika Sikka in Bangalore, Jonathan Stempel in New
York and Svea Herbst-Bayliss in Boston)
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