Joseph S. Patt, Christy L. Silvester, and Leonard Ellis filed a lawsuit in the U.S. Court of Federal Claims this past Friday, and a copy of their complaint is attached to this e-mail message. THe Patt Plaintiffs are represented by Matthew M. Riccardi at Richards, Kibbe & Orbe LLP in New York. The trio purchased more than $11.4 million of junior preferred shares in the GSEs prior to the Net Worth Sweep. “[T]he de facto nationalization of a private corporation under the guise of a ‘conservatorship’ by a federal agency and an ‘investment’ by
the Treasury is unprecedented,” the shareholders tell Judge Sweeney. But in addition to taking all of the GSEs equity value, the government also took shareholders’ rights to complain, which is something of value for which the trio wants just compensation. The Patt Plaintiffs tell Judge Sweeney that sections 4617(d)(1) and (2) of HERA required FHFA to repudiates contracts (like the instruments governing the junior preferred stock) “within a reasonable period” and the near-four year period between placing the GSEs into conservatorship and implementation of the net worth sweep exceeds the range of reason.
