Aug 16 Activist Bill Ackman's Pershing Square
Capital Management LP filed its second lawsuit in two days
against the U.S. government over bailout of Fannie Mae
and Freddie Mac, court documents show.
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
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
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
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
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
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)