Fannie Mae, Freddie Mac: First Court Loss via Fannie Mae Shareholders. John Carney of the WSJ is calling this a huge loss for Ackman – stay tuned for more analysis and info.

Court filing below.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
GAIL C. SWEENEY ESTATE MARITAL )
TRUST, derivatively on behalf of )
FEDERAL NATIONAL )
MORTGAGE ASSOCIATION, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-206 (ABJ)
)
UNITED STATES TREASURY )
DEPARTMENT, et al., )
)
Defendants. )
____________________________________)

Memorandum Opinion

Plaintiff Gail C. Sweeney Estate Marital Trust has brought a shareholder derivative lawsuit on behalf of the Federal National Mortgage Association (“Fannie Mae”) against defendants Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), the United States Department of the Treasury (“Treasury”), Secretary of the Treasury Jacob J. Lew, the Federal Housing Finance Agency (“FHFA”), and FHFA Director Melvin L. Watt.1 Am. Compl. [Dkt. # 32]. Plaintiff asserts four counts in the amended complaint: breach of fiduciary duty, abuse of control, mismanagement, and waste of corporate assets. Id. ¶¶ 146–63. Plaintiff seeks declaratory and injunctive relief, and attorneys’ fees and costs. Am. Compl., Prayer for Relief, ¶¶ A–B.

The FHFA is the Conservator of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), id. ¶ 26, and it has moved to substitute itself as plaintiff in this case, arguing that only the Conservator has standing to pursue claims on behalf of Fannie Mae. Renewed Mot. of FHFA as Conservator of Fannie Mae to Substitute for Shareholder Derivative Pl. & Mem. of P. & A. in Supp. [Dkt. # 37] at 2 (“FHFA Mot.”).

Plaintiff does not disagree that, as a general matter, only the Conservator has standing to sue on behalf of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA). But plaintiff contends that in this case, the Conservator suffers from a “manifest, disabling and irreconcilable” conflict of interest that prevents it from pursuing Fannie Mae’s interests, and that plaintiff should therefore be permitted to bring this action. Am. Compl. ¶ 93; Pl.’s Opp. to FHFA Mot. & to Resp. of Defs. U.S. Dep’t of Treasury & Sec’y of Treasury [Dkt. # 41] at 1 (“Pl.’s Opp.”). The Court finds that there is not a “manifest, disabling and irreconcilable” conflict of interest in this case and that plaintiff lacks standing to sue on behalf of Fannie Mae, so it will grant the FHFA’s motion to substitute.

 

Fannie Mae, Freddie Mac: Big Ackman Court Loss?

See full Fannie Mae, Freddie Mac: First Court Loss Today in PDF format here via Fannie Mae Shareholders