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18 "The rights of shareholders have been trampled on and their access to information has been blocked at every turn since 2012." –Tim Pagliara, GSE Shareholder SHAREHOLDER TO FANNIE MAE AND FREDDIE MAC: SHOW ME THE CORPORATE RECORDS Add Tim Pagliara, the Executive Director of Investors Unite and CEO of CapWealth Advi- sors, to the list of GSE shareholders that are suing the government over the sweeping of Fan- nie Mae and Freddie Mac profits into the U.S. Department of Treasury, commonly known as the Net Worth Sweep. Pagliara has filed lawsuits in both Dela- ware and Virginia state courts seeking access to corporate records from both of the GSEs related to the Net Worth Sweep. Fannie Mae and Freddie Mac received a combined $187.5 billion bailout from taxpayers in 2008 to re- main afloat. In September 2008, they were taken into conservatorship by the Federal Housing Finance Agency (FHFA). In 2012, the GSEs returned to profitability but the terms of the bailout agreement were amended to require all of their profits to be swept into Treasury every quarter. e Net Worth Sweep has resulted in several lawsuits from GSE investors, notably by Fairholme Funds and Pershing Square Capital Management. Pagliara's lawsuit, however, is the first one to assert a shareholder's right to inspect corporate documents under state corporate laws in which Fannie Mae and Freddie Mac each operate—Delaware in the case of Fannie Mae and Virginia in the case of Freddie Mac. "e rights of shareholders have been trampled on and their access to information has been blocked at every turn since 2012," Pagliara said. "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." Although Pagliara is the founder and executive director of Investors Unite, which is a coalition of individual investors committed to preserving shareholder rights for Fannie Mae and Freddie Mac investors, he is not filing these lawsuits on behalf of Investors Unite, according to an announcement from the company. Pagliara filed his lawsuits in the state courts after written requests to inspect corporate re- cords, which are available to shareholders under state law in both Delaware and Virginia, were denied. Although Fannie Mae and Freddie Mac have been under conservatorship of the FHFA since 2008, and are charted by the government, the Ninth Circuit Court of Appeals ruled earlier in March that the GSEs are private compa- nies in a False Claims Act suit filed by realtors against several of the nation's largest lenders. e plaintiffs in that case alleged that the defendants certified that certain loans purchased by Fannie Mae and Freddie Mac were free and clear of certain HOA charges and liens when they were not, and further alleged that the false certifications were made to the GSEs as instru- mentalities of the U.S. government. e Ninth Circuit ruling caused a buzz in the mortgage industry and prompted an attorney representing the plaintiff in another Net Worth Sweep lawsuit to write a letter to a federal judge in the U.S. District Court for the District of Delaware, informing the judge of the Ninth Circuit decision. Pagliara's complaints point out that the Treasury's publicly stated goal of the Net Worth Sweep is to ensure that "every dollar of earnings each firm generates is used to benefit taxpayers," which Pagliara claims ignores shareholder rights and is un- derpinning the conservatorship that requires Fannie Mae's and Freddie Mac's assets to be "conserved." "Shareholders have a right to understand how this sweep of earnings from private com- panies that trampled the rights of shareholders was conceived and executed," Pagliara said. "By inspecting the companies' corporate records, we will be better able to answer key questions about that decision-making process."

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