Fairholme Funds was awarded a great victory when Judge Margaret Sweeney ruled that there should be broad access in terms of discovery to the FHFA records that go back for a long time. The ruling swept aside the narrow 2012 period which the FHFA desired to restrict the discovery to.
The Judge also disallowed the FHFA argument that the concerned court lacks authority when it comes to affecting the FHFA functions or powers. She reminded the agency of not being outside the purview of US law. Fairholme Funds is regarded as entry point for GSE shareholders and Investors Unite who are suing against FHFA.
Her judgment also noted that the court is in accordance with case law of United States Court of Appeals for Ninth Circuit. This appeals court states that it is not possible for FHFA to evade judicial reviews.
Judge Sweeney issued the requisite orders and opinions to permit the process of discovery to go on in this notable lawsuit. The judge granted discovery starting from June 2011 to August 2012, despite FHFA arguing that the court must permit discovery only in the period beginning January 2012 and ending August 2012. She also permitted discovery from April 2008 to December 2008, versus the government requested September to December 2008.
The Judge’s order is important as it will encompass more pre-decision deliberations that Investors Unite claims is important to the case. Investors in GSEs prefer mortgage giants to give the shareholder profits owed to them. However, the GSEs are not complying with that as a component of bailout agreement with the federal government.
When Freddie Mac and Fannie Mae were bailed into life during the recent financial crisis and put into conservatorship, the total profits were funneled back into the US Treasury. Since the government now has got back its dues, investors want their rights and stake to be upheld.
Ralph Nader, the consumer advocate, Tim Pagliara, the CEO of CapWealth, Carl Icahn, the investor and many other GSE shareholders coming from a number of states are participating in the campaign under the Investors Unite banner.
Pagliara said that theft is not a privilege and the order and opinion from the judge is a positive step when it comes to Freddie Mac and Fanny Mae investors and members of Investors Unite all over the United States. He added that investors must know when US Treasury found out that Freddie and Fannie will be profitable and the way it was incorporated into decision making process around Third Amendment Sweep.