Sort of. Winning the Perry Capital lawsuit and vacating the third amendment would mean we go back to the original arrangements of the PSPAs. This protects the GSEs net profits and capital, keeps the GSEs safe and solvent and indirectly protects and increases the shareholders' current stock value/pps.
There is no guarantee that the decision will return the DTAs from the US Treasury. However, there is money left in Treasury draw that is allotted to the GSEs. So, it could be drawn from that US Treasury stash to balance out the monetary injustice done.
It is unknown what will be discussed and decided among the parties and judge regarding the monies obtained from previous net profit sweeps based on the third amendment to the PSPAs. The prayer of relief anticipates that "redemption of the Government Preferred Stock" will be allowed.
It seems possible that there will be discussions of putting money back in and/or foregoing further dividend payments to match/equalize what would have been the case if only a 10% percent dividend per quarter were taken from January 1, 2013. That seems just and proper. Doing that would result in billions of dollars returned to the GSEs and this indirectly bodes well for shareholders even while still in the conservatorship and afterwards as well.
As you suggest, and as anticipated in part by the suit, the ruling could allow the judge on the recommendation of the plaintiff that the previously swept funds could be used to reduce the liquidation preference of the Senior Preferred as a simple means to redress the net worth sweeps and perhaps the liquidation preference redemption rules of the Senior Preferred as a whole.
I doubt that the liquidation preference provision for order of compensation at liquidation or dividend distribution will be changed. That rule is a standard contractual venture capital practice and is generally unrelated as unique or special provision of the PSPAs. It is found everywhere in the venture capital world.
However, the arrangements made by the US Treasury in the PSPAs is a sort of predatory venture capitalist effort where there is double dipping by not only having both the Senior Preferred and the warrant on 79.9% of the common but also a provision preventing redemption which no company would subject themselves to. Hopefully the judge will see fit to fulfill the last request made in the prayer of relief.
"Granting such other and further relief as this Court deems just and proper."
Finally, the case may stimulate the judge to follow HERA and deem it just and proper to rule GSEs out of the conservatorship immediately at the ruling or at some later date. After all, the GSEs are private shareholder property and cannot be forever detained as conservatorship hostages of the US Treasury and FHFA.
News 
Market Data 
Discover 
