Six former Fannie, Freddie executives sued for securities fraud
NEW YORK (Reuters) – U.S. securities regulators sued six former executives at Fannie Mae and Freddie Mac on Friday, including ex-CEOs of both mortgage finance companies, saying they misled investors over exposure to risky home loans.
The U.S. Securities and Exchange Commission sued three former executives at Fannie Mae and three at Freddie Mac. The civil charges were brought in two separate lawsuits filed in U.S. District Court in Manhattan.
The SEC accused former Fannie Mae CEO Daniel Mudd, former Freddie Mac CEO Richard Syron and four other defendants of knowingly approving false statements to investors that drastically misrepresented the extent of the firms’ exposure to toxic mortgages.
Spokesmen for Mudd and Syron did not immediately respond to requests for comment.
The SEC said both firms have agreed to cooperate with the agency and have agreed to admit responsibility for the alleged conduct, without agreeing or denying that they are liable. The firms have also entered into non-prosecution agreements with the agency, the SEC said.
Freddie Mac and Fannie Mae have been propped up by $169 billion in federal aid since they were rescued by the government in 2008.
The cases are SEC v. Daniel Mudd et al., No. 11-9202 and SEC v. Syron et. al No. 11-9201, U.S. District Court for the Southern District of New York.
(Reporting by Basil Katz, editing by Gerald E. McCormick and John Wallace)