August 14, 2014 / 10:55 PM / 5 years ago

Pershing Square sues U.S. over Fannie Mae, Freddie Mac

A woman toting an umbrella passes Fannie Mae headquarters in Washington February 21, 2014. REUTERS/Kevin Lamarque

(Reuters) - Pershing Square Capital Management LP, the hedge fund firm run by William Ackman, on Thursday sued the U.S. government, claiming that its stripping of profits from Fannie Mae FNMA.OB and Freddie Mac FMCC.OB unconstitutionally short changes investors in the companies’ common stock.

In a complaint filed with the U.S. Court of Federal Claims in Washington, D.C., Pershing said the practice since 2012 of sweeping profits from government-controlled Fannie and Freddie into the U.S. Treasury as dividends creates a “windfall” for the government at the expense of shareholders.

It said the practice violates the Fifth Amendment of the U.S. Constitution by taking private property for public use without just compensation. The lawsuit seeks damages and other remedies.

The Treasury Department and the Federal Housing Finance Agency, which oversees Fannie and Freddie, were not immediately available for comment.

Reporting by Jonathan Stempel in New York and Svea Herbst-Bayliss in Boston; Editing by Lisa Shumaker

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