Replies to post #578166 on Fannie Mae-No Politics (FNMA)

[Guido2]

My suggestion is you have a direct conversation with one of the litigants. The most accessible one is Bryndon Fisher. He posts on Google Groups 2 and Seeking Alpha.

[kthomp19]

Not sure Sweeney will limit class to pre cship holders, but in any event, she hasn't ruled so its still pending.

I don't think she has a choice when it comes to this. The Washington Federal compaint asks for pre-conservatorship shareholders to be certified as a class. If that doesn't happen, only the named plaintiffs would benefit from any damages award. There is basically no path to the Washington Federal lawsuit giving a direct monetary benefit to post-conservatorship shareholders.

The real value will be in the discovery process: Washington Federal challenges events all the way back to 2008, so they can ask for a lot more discovery documents than any other plaintiff is able to. If the contents of those documents are damning enough, it can make a global settlement easier for the government to swallow.

I did see TH's comment (thank you) and wondered if that is based on past, or recent, knowledge.

The quote from three years ago is necessarily based on old knowledge, but today's post by Tim Howard reinforces it. I don't see any reason to believe that things have changed on that front.

Also, another poster at TH wondered if "new investors" might provide new/additional funding for the Wash Fed suit given that the warrants could have significant value as an element of the takings calculation.

I suppose it's possible, but again, post-conservatorship shareholders cannot directly benefit from the Washington Federal case, whether it's certified as a class action or not. Washington Federal isn't trying to get the warrants cancelled or overturned (and Sweeney doesn't have the authority to do it anyway), they just want money for pre-conservatorship shareholders. There is no avenue in any court case, Washington Federal included, to get the warrants (or the 10% dividend rate, for that matter) overturned.

[Randy Watson]

Plaintiffs are correct that the original bargaining took place when the GSEs issued the shares, irrespective of whether the securities changed hands after that. Further, the bargained-for-rights related to dividends and liquidation preferences traveled with the shares to subsequent purchasers. Under both Delaware and Virginia statutory law, ‘a purchaser of a certified or uncertified security acquires all rights in the security that the transferor had or had power to transfer.’ ‘All rights in the security’ as used in the statutes ‘means rights in the security itself as opposed to personal rights.’ In other words, ‘[w]hen a share of stock is sold, the property rights associated with the shares, including any claim for breach of those rights and the ability to benefit for any recovery or other remedy, travel with the shares.’ Rights associated with the dividends and liquidation preferences inhere in the security.”

Judge Royce Lamberth

Fairholme Funds v. FHFA

September 28, 2018