Friday, 22 May 2015
Last updated 5 hours ago
Dec 16 2011 | 4:39pm ET
The Securities and Exchange Commission today accused the CEO of Fortress Investment Group of fraud during his stewardship of Fannie Mae.
Daniel Mudd is among six former executives of Fannie and Freddie Mac accused of making false and misleading statements about the government-sponsored lenders' exposure to subprime mortgages. Mudd led Fannie Mae from 2004 until he was fired in 2008 when the federal government took control of the firm. Mudd became CEO of Fortress in August 2009.
"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," SEC enforcement chief Robert Khuzami said. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books."
The lawsuit, filed today in Manhattan federal court, was some time in coming: The SEC sent Mudd a Wells notice in March, indicating that an enforcement action was likely. According to the suit, Mudd and his fellow executives misleadingly described its subprime loans as loans to "borrowers with weaker credit histories" and said that total exposure was only $4.8 billion, when it in fact was almost 10 times higher.
Fannie and Freddie themselves have entered into civil non-prosecution agreements with the SEC, agreeing to cooperate in the regulator's cases against their former executives.
Mudd in a statement denied the allegations, saying that "every piece of material data about loans held by Fannie Mae" was available.
"The government reviewed and approved the company's disclosures during my tenure, and through the present," Mudd said. "Now it appears that the government has negotiated a deal to hold the government, and government-appointed executives who have signed the same disclosures since my departure, blameless—so that it can sue individuals it fired years ago."
For its part, Fortress said it was "undertaking a thorough review of the matters addressed in the complaint" while stressing that the lawsuit "does not relate to Fortress."
While neither Fortress nor Mudd indicated that the latter's exit was imminent, Wall Street blog Business Insider today cited an anonymous tip that Stuart Bohart, the former Morgan Stanley asset management chief who joined Fortress last year as head of liquid markets, would take over for Mudd.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…