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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 briefing of our appeal of the dismissal of the district court case has been temporarily suspended while the D.C. Circuit considers a motion to supplement the record.
Briefing of the D.C. Circuit appeal is complete and the Court heard oral argument on April 15, 2016.