On May 18, 2009, Friedman, Billings, Ramsey Group, Inc., which is doing business as Arlington Asset Investment Corp. (the "Company"), and FBR TRS Holdings, Inc. ("TRS Holdings"), the Company's wholly-owned subsidiary, entered into a stock repurchase agreement (the "Stock Repurchase Agreement") with FBR Capital Markets Corporation ("FBR Capital Markets"), the Company's publicly traded, majority-owned subsidiary. The closing under the Stock Repurchase Agreement occurred on May 20, 2009 (the "Closing"). Pursuant to the Stock Repurchase Agreement, TRS Holdings sold approximately half of its shares of FBR Capital Markets common stock, or 16,667,000 shares (the "Shares"), to FBR Capital Markets for an aggregate purchase price of approximately $72.5 million, or $4.35 per Share. Immediately following the Closing, the Company beneficially owned 16,666,049 shares of FBR Capital Markets common stock (the "Remaining Shares") (representing an approximate 39% ownership interest in FBR Capital Markets).

The Company expects to use the net proceeds from the sale of the Shares for general corporate purposes and investments, including investments in non-agency residential mortgage-backed securities and residential mortgage-backed securities guaranteed by a U.S. Governmental agency or U.S. Government-sponsored entity, among others.

Under the Stock Repurchase Agreement, the Company and TRS Holdings provided certain designated representatives of FBR Capital Markets with an irrevocable proxy with respect to the Shares for the upcoming FBR Capital Markets annual meeting of shareholders to be held on June 4, 2009 (the "FBR Capital Markets Annual Meeting"). In accordance with this proxy, the Shares will be voted for the election of each nominee for director recommended by the FBR Capital Markets Board of Directors (the "FBR Capital Markets Board") and in accordance with the recommendation of the FBR Capital Markets Board for all other matters that are subject to a vote of the shareholders of FBR Capital Markets.

In addition, the Company has agreed to waive all registration rights it may have with respect to FBR Capital Markets' next follow-on equity offering so long as such offering occurs within one year after the Closing; provided that if the aggregate public offering price of the shares of FBR Capital Markets to be registered and sold in such follow-on offering exceeds $90 million, then the Company has the option to elect either: (a) to sell the number of shares up to 50% of the shares registered and sold in such follow-on offering in excess of $90 million; or (b) to sell up to 100% of the shares to be sold pursuant to the underwriters' over-allotment option in such follow-on offering. Further, in addition to agreeing to a customary lock-up restriction in connection with FBR Capital Markets' next follow-on offering, the Company has agreed not to sell any of its Remaining Shares prior to FBR Capital Markets' next follow-on offering unless FBR Capital Markets has not filed a registration statement with respect to such offering within 45 days of the Closing or such sale is at a price per share at least equal to $4.35.

In the Stock Repurchase Agreement, FBR Capital Markets has agreed to file a shelf registration statement at the Company's request in the event that the Company sells or proposes to sell at least 400,000 Remaining Shares to a third party (a "Selling Shareholder"). The shelf registration statement would include such number of Remaining Shares after the Closing as are held by one or more Selling Shareholders and may also include any Remaining Shares held by the Company. FBR Capital Markets will be obligated to file such shelf registration statement as soon as practicable after the Company's request and in any event no later than 90 days after its request. In certain circumstances, the Company may request that FBR Capital Markets file multiple registration statements relating to the Remaining Shares but in no event may the Company request more than six registration statements under the Stock Repurchase Agreement. FBR Capital Markets also agreed to cooperate diligently and in good faith with the Company, if requested, to facilitate the sale of the Remaining Shares, in whole or in part, to prospective purchasers, subject to the terms and conditions set forth in the Stock Repurchase Agreement.

In connection with the Closing, the Company and TRS Holdings also entered into a series of ancillary definitive agreements with FBR Capital Markets, including, among others, a (i) transition services agreement ("Services Agreement"),
(ii) assignment and assumption agreement (with respect to certain contracts that relate now, did relate or will relate primarily to the business of FBR Capital Markets) ("Assignment and Assumption Agreement"), (iii) trademark and copyright assignment ("Trademark Assignment"), (iv) domain name assignment ("Domain Assignment") and (v) trademark and license agreement ("Trademark License"). In addition, at the Closing, the Company, TRS Holdings and FBR Capital Markets entered into a definitive amended and restated voting agreement with certain affiliates of Crestview Partners ("Crestview"), a New York-based private equity firm

In connection with the Closing, the Company and FBR Capital Markets terminated, effective as of the Closing, certain existing intercompany agreements, including
(i) the corporate agreement, dated as of July 20, 2006, between the Company and FBR Capital Markets, as amended (the "Corporate Agreement"), the services agreement, dated as of July 20, 2006, between the Company and FBR Capital Markets (the "2006 Services Agreement"), and the trademark license agreement, dated as of July 20, 2006, between the Company and FBR Capital Markets (the "2006 License Agreement"). The material terms of the Corporate Agreement, 2006 Services Agreement and 2006 License Agreement are described below.

Corporate Agreement. In connection with FBR Capital Markets' July 2006 private offering, we entered into a corporate agreement with FBR Capital Markets pursuant to which, among other things, FBR Capital Markets granted us a continuing option to purchase, through FBR TRS Holdings, additional shares of FBR Capital Markets common stock. In addition, the corporate agreement contained indemnification and contribution provisions pursuant to which we agreed to indemnify FBR Capital Markets against any and all liabilities and claims relating to the businesses contributed to FBR Capital Markets prior to completion of FBR Capital Markets' July 2006 private offering and claims arising out of any breach by us of any of our obligations under the corporate agreement. FBR Capital Markets also agreed to indemnify us and related persons against any and all liabilities and claims arising out of any breach by FBR Capital Markets of any of its obligations under the corporate agreement. The corporate agreement also provided certain guidelines for the pursuit of corporate opportunities identified by directors serving both on the FBR Capital Markets Board and our Board of Directors.

2006 Services Agreement. Pursuant to the 2006 Services Agreement, FBR Capital Markets provided, or caused one or more of its subsidiaries to provide, to us certain services for fees based on actual costs incurred by FBR Capital Markets and its subsidiaries in providing the services. Similarly, we provided to FBR Capital Markets under the same services agreement certain services for fees based on actual costs incurred by us and our subsidiaries in providing the services.

2006 License Agreement. Pursuant to the 2006 License Agreement, we granted FBR Capital Markets a perpetual, royalty free limited license to use certain of the trademarks and service marks, including the right to use the corporate name "Friedman, Billings, Ramsey" and "FBR" solely in connection with the operation of its business.

This summary description of the Corporate Agreement, 2006 Services Agreement and 2006 License Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements which are filed as Exhibit 10.2, 10.4, and 10.6 to the Company's report on Form 8-K filed with the Securities and Exchange Commission on July 26, 2006 and incorporated herein by reference.

The information included in the first paragraph of Item 1.01 of this report on Form 8-K is incorporated herein by reference.

The information included in Item 1.01 of this report on Form 8-K is incorporated herein by reference.

On May 20, 2009, the Company issued a press release announcing the Closing, a copy of which is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

(d) Exhibits

10.1     Stock Repurchase Agreement, dated May 18, 2009, by and among the
         Registrant, FBR TRS Holdings, Inc. and FBR Capital Markets Corporation.

10.2     Transition Services Agreement, dated May 20, 2009, by and between the
         Registrant and FBR Capital Markets Corporation.

10.3     Assignment and Assumption Agreement, dated May 20, 2009, by and between
         the Registrant and FBR Capital Markets Corporation.

10.4     Trademark and Copyright Assignment, dated May 20, 2009, by and between
         the Registrant and FBR Capital Markets Corporation.

10.5     Domain Name Assignment, dated May 20, 2009, by and between the Registrant
         and FBR Capital Markets Corporation.

10.6     Trademark License Agreement, dated May 20, 2009, by and between the
         Registrant and FBR Capital Markets Corporation.

10.7     Amended and Restated Voting Agreement, dated May 20, 2009, by and among
         the Registrant, FBR TRS Holdings, Inc., FBR Capital Markets Corporation,
         Forest Holdings (ERISA) LLC, and Forest Holdings LLC.

99.1     Press release dated May 20, 2009.