From Fairholme Capital email to investors
Favorable Ruling in Court of Federal Claims Unsealed

Dear Investor,

On October 3rd, Judge Margaret Sweeney released a redacted version of her 80-page Opinion and Order that grants our motion to compel delivery of withheld documents. Please click here to view the unsealed Opinion and Order.

Ginnie Mae, Fannie Mae, Freddie Mac

For those who do not wish to read the lengthy ruling, below are our summary points:

The Order requires the U.S. Government to produce dozens of documents that had been withheld based on improper assertions of various privileges, including the presidential communications privilege.

Judge Sweeney ended her ruling by directing the U.S. government to file “a memorandum with the court explaining why the court should not require defendant to pay [Fairholme plaintiffs’] reasonable expenses in making the motion, including attorney’s fees.” Op. 80. It is unusual for a court to order such briefing without the prevailing party filing a motion for sanctions, and the Court’s action suggests that it believes the Government’s decision to withhold these documents was indefensible.

We believe that this ruling dents the dam of haphazard and inconsistent assertions of privilege by which the U.S. government has refused to share documents during the discovery process of our case.  This is a step forward and we are hopeful that the floodgates will eventually open, resulting in our ability to review the over 11,000 responsive documents improperly shielded from us during discovery in order to fully unmask the U.S. Treasury’s motives when it enacted the “Net Worth Sweep.”

We note that others are beginning to weigh in on the decision:
– “Fannie Mae, Freddie Mac Investors Win Round Against Government,” by Roger Parloff, Fortune  http://fortune.com/2016/10/04/fannie-mae-freddie-mac-ruling-government/
– “Fannie and Freddie Investors Win Round in Suit Against U.S.,” by Gretchen Morgenson, New York Times http://www.nytimes.com/2016/10/05/business/court-orders-us-to-release-documents-on-mortgage-giants.html

Kind regards,

Investor Relations

Fairholme Distributors (10/16)