Oral Arguments Heard In Fannie Mae Shareholders Class Action

Boies Schiller Flexner argued before the U.S. Court of Appeals for the District of Columbia Circuit in defense of an $812 million judgement the firm secured against the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac on behalf of Fannie Mae and Freddie Mac shareholders.

BSF argued that the U.S. Supreme Court’s decision in Collins v. Yellen only confirmed FHFA’s authority to adopt the Net Worth Sweep, not whether it breached shareholders’ rights. BSF contended the Sweep — diverting all profits to treasury — was unprecedented, unsupported by analysis, and unjustified by the stated risk of “circular draws.” Instead, the record showed treasury acted to prevent Fannie and Freddie from retaining profits and rebuilding capital. BSF argued this arbitrarily defeated reasonable shareholder expectations, breached the implied covenant of good faith, and gave current shareholders standing because it permanently stripped them of profit rights.