Tim Pagliara Files Suit to Inspect Fannie Mae and Freddie Mac Corporate Records
WASHINGTON, March 14, 2016 /PRNewswire-USNewswire/ -- CapWealth Advisors CEO Tim Pagliara, the executive director of Investors Unite, today filed suits in state courts in Delaware and Virginia seeking corporate records from Fannie Mae and Freddie Mac relating to the Net Worth Sweep of the mortgage finance companies' assets.
The two privately-held, government-chartered companies were placed under conservatorship at the height of the financial crisis in late 2008. When the companies returned to profitability in 2012, the terms of their agreements with the U.S. Department of Treasury were amended to force them to turn over, every quarter, all their profits to the Treasury. This so-called Net Worth Sweep prompted several shareholder lawsuits. Pagliara's complaints filed today are the first to assert a shareholder's right to inspect corporate records pursuant to the state corporate laws under which each company operates.
"The rights of shareholders have been trampled on and their access to information has been blocked at every turn since 2012," said Pagliara. "I owe it to the people who have entrusted me with their investments to pursue all avenues to demonstrate that the Net Worth Sweep violates both federal law and, I strongly believe, state law."
Pagliara is the founder of CapWealth Advisors, an SEC-registered investment advisory firm in Franklin, Tennessee. He is also the founder of Investors Unite, a coalition of individual investors committed to preserving shareholder rights for those invested in Freddie Mac and Fannie Mae. However, Pagliara is not acting on behalf of Investors Unite in this litigation.
Although Fannie Mae and Freddie Mac are under the conservatorship of the Federal Housing Finance Agency (FHFA), they remain private entities owned by shareholders, governed by Delaware's corporate laws in the case of Fannie Mae and Virginia's corporate laws in the case of Freddie Mac. Accordingly, Pagliara filed suit in state courts after his written requests to inspect corporate records, available to him as a shareholder under both states' laws, were refused.
Among other things, the complaints note that the U.S. Treasury Department publicly stated the goal of the Net Worth Sweep was to make sure that "every dollar of earnings each firm generates is used to benefit taxpayers." This ignores the rights of the companies' shareholders and is inconsistent with the law underpinning the conservatorship, the Housing and Economic Recovery Act, which requires that the companies' assets be "conserved."
"Shareholders have a right to understand how this sweep of earnings from private companies that trampled the rights of shareholders was conceived and executed," added Pagliara. "By inspecting the companies' corporate records, we will be better able to answer key questions about that decision making process."
About Investors Unite: Formed by Tennessee investor and CapWealth Advisors Chairman and CEO, Tim Pagliara, Investors Unite (investorsunite.org) is a coalition of over 1,500 private investors from all walks of life, committed to the preservation of shareholder rights for all invested in Fannie Mae and Freddie Mac. The coalition works to educate shareholders and lawmakers on the importance of adopting GSE reform that fully respects the legal rights of Fannie Mae and Freddie Mac shareholders and offers full restitution on investments.
SOURCE Investors Unite
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