“The U.S. government paid no heed to the rights and interests of shareholders when it effectively nationalized these two corporations,” said attorney Robert M. Roseman, managing partner of SRKW. “While other major financial institutions were attempting to minimize their losses during a difficult economy, the government essentially forced Fannie Mae and Freddie Mac to do the exact opposite, expanding their exposure to some of the riskiest assets.”
The lawsuit also claims that the government unlawfully entered into stock agreements executed at the time of the conservatorships that established a grossly unfair lending arrangement by issuing the government senior preferred shares worth billions of dollars and gave the government a right to acquire nearly 80 percent ownership in both Fannie Mae and Freddie Mac, at a nominal exercise price of $0.00001 per share, rendering existing common and preferred stock in the companies nearly worthless.
“We are not disputing that the government’s actions may have been in the best interests of the national economy,” said attorney Steve W. Berman, managing partner and co-founder of Hagens Berman. “However, it was obligated to provide just compensation under the Fifth Amendment for shareholders who suffered significant financial losses.”
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