Contract will be invalidated, as Sweeney said, they acted like the mob.
The SPSPA contains 2 things a liquidation preference and a warrant, the liquidations preference initially was given on $1B ($1,000 per share) and a warrant representing 79.9% of the common stock, so treasury cannot own more than 79.9%(sure they can buy stock themselves for market value but anybody can) as the contract does not allow it to be more, the commons indeed still own 100% of the commons now, but it REPRESENTS 20.1% of the companies as per the contract the shares are given away without any consideration and most importantly without additional funds, this is not a normal procedure(lack of fiduciary duty) as you cannot ask somebody to give you a loan and ask more(The warrant) than you physically give, let alone ask for future profits, it is depraved
A junior to common conversion, does violate the constitution as the statue of FHFA is to preserve and conserve and to put in sound and solvent condition, any action outside this statue is unconstitutional, it is unheard the government does not follow its own rules And because they did the opposite, they cannot glue pieces together that were not broken in the first place
The FHFA/FHFA-C does have fiduciary duty to shareholders as that is the consent the BOD gave to the FHFA-C, the BOD represents the shareholders and they agreed to preserve, not to give away anything, the three judges did not do anything other than declaring they lack authority, and none of the 3 judges said there was no fiduciary duty
The government cannot escape the 79.9% ownership fiduciary duty, they are the majority shareholder if the warrant is exercised or not they have the control and this control gives them the fiduciary duty
All lawsuits are built on the case to void the SPSPAs, the mayority hold the 3th amendment is illegal, but what it actually says is because the 3th amendment is illegal the contract is “VOIDABLE” this is a much more sophisticated claim then it at first sides looks, when a contract is voidable (after a ruling the 3th is illegal) the FHFA-C is obligated due to their fiduciary duty to void the contract, and if the contract is void all funds needs to be returned and the recapitalization is a fact
The 10% dividend ranks lower to the outstanding claims and I understand why no lawsuit is asking relief on it, although important and illegal(it will be very costly for treasury to return all funds with 10% premium for 12 years) I don’t see it as crucial as when the 3th amendment is ruled illegal(and it already is) but ones declared illegal the SPSPA debacle is more or less solved because the contract becomes voidable
Sweeney never said treasury was not a controlling shareholder, she can’t because treasury is the controlling shareholders please look at context again, the context of fiduciary duty to shareholders is important while the FHFA-C does not have fiduciary duty to shareholders on regulation or individual things they implemented, they DO have fiduciary duty on giving away 79.9% of the company as it lacks consent of the BOD(shareholders)
The equity raise FHFA is talking about is imo stage crafting, the lawsuits are near completion, and I understand that FHFA is not going to say, “sorry guys we are going to lose the lawsuits and FnF will instantly be capitalized” of course he says what prior administrations said and that is why they keep fighting, the point of no return was a decade ago, it would be very stupid to have a change of mind suddenly, but legally they already lost on all fronts and that is why cooper said pressure is immense
1) All lawsuit challenge the SPSPAs and the warrants, most lawsuits challenge the 3th amendment and by that the SPSPA is voidable and can only be void out of fiduciary duty 2) The 20.1% is important as the government receives 100% of all profits in perpetually and the 20.1% minority shareholders are excluded form profits, and of course the BOD did not agree on that consent to all profits to the government in perpetually
FHFA is NOT allowed to act in its own interest (I think you talk about 12 U.S.C. § 4617(b)(2)(J).) as the FHFA now has the powers of the BOD, the FHFA has 1.000’s maybe even 10.000’s of fiduciary duties to the Fannie and Freddie and Shareholders, some of the fiduciary duties are not granted as the question presented is covered or relief can be given on other grounds( for instance “HERA preempts any state law”, then HERA is unconstitutional as the law and constitution rank higher than HERA) Then it follows the judge says FHFA-C does not have fiduciary duty, but only because it is preempted by HERA NOT because it does not have fiduciary duty, the shareholder rights are always protected, and anybody whoever does anything to shareholders will be accountable, in this case the FHFA/FHFA-C, so either shareholders have relief on HERA declared unconstitutional as the agency cannot act out of self-interest or shareholders receive relief out of the breached fiduciary duty, however both claims come from the breach of fiduciary duty
If in the future an SPO might be necessary, the court first must make a final ruling on: 1) The FHFA/FHFA-C did not breach consent on the implied-in-fact contract they had with the BOD (already declared illegal by the 5th circuit as it was contrary to conserve and preserve U.S.C. § 4617(b)(2)(D). and because 4617 contradicts the 3th amendment) 2) The 3th amendment is legal (already declared illegal by the 5th circuit as it was contrary to conserve and preserve U.S.C. § 4617(b)(2)(D).) 3) The warrant is legal (because of 1 and 2 above the contract is voidable and needs to be voided by Fannie and Freddie and FHFA-C)
