¶ 154.33 And although the Government does not technically “own” the
shares of common stock for which it has warrants, at the time of the Starr decision the
Government likewise had not exercised those warrants. See Starr, 106 Fed. Cl. at 80. Moreover,
33 See also N. Eric Weiss, Congressional Research Service, Fannie Mae’s and Freddie Mac’s
Financial Status: Frequently Asked Questions, at 13. (“Because the appeal of the preferred stock is
centered on the security of its dividend payments, the long-run value of the GSEs’ preferred stock has
been reduced. The value of common stock has been reduced because of the termination of their dividends
and increased uncertainty over the future long-run viability of the enterprises.”).
Case 1:13-cv-00385-MMS Document 37 Filed 12/16/13 Page 39 of 67- 29 –
unlike with AIG, here there is no need for the Government to exercise the warrants because, by
virtue of the conservatorships, the Government already has control of the Companies. And
control is the relevant fact. As the Supreme Court of Delaware explained in Rossette:
A rule that focuses on the degree or the extent of the expropriation,
and requires that the expropriation attain a certain level before the
minority stockholders may seek a judicial remedy directly,
denigrates the gravity of the fiduciary breach and condones
overreaching by fiduciaries – at least in cases where the resulting
harm to the minority falls below the prescribed threshold for
“materiality.”
906 A.2d at 102.
Even though these facts are not identical to those in Rossette or Starr, the principles
articulated in those cases and their progeny apply equally here.34 For example, in Rhodes v.
Silkroad Equity, LLC, 2007 WL 2058736
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