Investors assert constitutional claim against U.S. government

In a matter with significant constitutional implications, we have filed actions against the U.S. government in federal district court and the U.S. Court of Federal Claims on behalf of shareholders of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac have been under government conservatorship since 2008, and both cases challenge the government’s August 2012 decision to impose a “net worth sweep,” whereby all of the companies’ net income is paid to the government each quarter. In the Federal Claims action, our clients allege that the net worth sweep constitutes a “taking” under the Fifth Amendment, and that they are entitled to just compensation for the loss of their economic rights. In the district court case, our clients allege that the net worth sweep violates their common law rights and entitles them to damages. Both cases are pending. Kessler Topaz is conducting discovery in the Federal Claims case and recently achieved an appellate victory in the D.C. Circuit Court of Appeals, which remanded the district court case to the lower court following the district court’s dismissal of the case. We are currently briefing a motion for reconsideration of the D.C. Circuit’s order to clarify and correct certain portions of the D.C. Circuit’s order. The D.C. Circuit recently granted in part our motion for reconsideration and issued an order clarifying and correcting certain portions of its prior order. The case will now be remanded to the district court for further proceedings.