An Inside Look at Fannie’s $170M Securities Settlement

The National Law Journal
October 29, 2014

Thomas A. Dubbs featured in a Q&A discussing the recent Fannie Mae settlement

After many years of litigation, Labaton Sucharow partner Thomas A. Dubbs spoke with The National Law Journal on the proposed settlement and obstacles faced during the litigation.

According to Tom, “Fannie Mae is in conservatorship, so in some sense we were litigating against the U.S. government. Their strategies and goals are different than those of a typical defendant. An additional wrinkle was a housing and finance agency regulation that in essence said if a plaintiff recovered a judgment they could not execute on that judgment, so it would be worthless. Although two judges expressed skepticism concerning that regulation, it was a cloud over the litigation. Another major challenge was the Second Circuit decision involving Freddie Mac.”

He added, “The challenge was to develop from the record and through experts alternative damages theories. [To claim what’s known as] disaggregating damages, we had to recreate what lawyers call the “but for” world of what Fannie Mae would have looked like without the securities law violations and without the extrinsic fact of their going into conservatorship. That involved going through millions of documents that detailed Fannie Mae’s investment holdings and its various practices to recreate what would have happened had they purchased, processed and retained securities of a certain investment grade.”