Fortress Chief Mudd Takes Leave In Wake Of Fraud Suit

Dec 21 2011 | 10:45am ET

Fortress Investment Group CEO Daniel Mudd will take a leave of absence from the alternative investments giant just days after he was accused by the Securities and Exchange Commission of fraud during his tenure as CEO of Fannie Mae.

Fortress said that co-founder Randal Nardone will serve as interim CEO, effective immediately.

The SEC filed suit against Mudd and five other former executives of Fannie and fellow government-sponsored mortgage lender Freddie Mac on Friday. The six are accused of making false and misleading statements about the firms' exposure to subprime mortgages.

Mudd was fired by Fannie in 2008, after four years at the helm, when the federal government took control of the firm. He became CEO of Fortress the following year.

"I have requested a leave of absence from my position as chief executive officer to ensure that any time or attention I need to focus on matters outside Fortress will not affect the business or operations of the company," Mudd said in a statement.

Fortress has not been accused of any wrongdoing in the case, and Mudd has denied that he did anything wrong.

"We are grateful to Dan for his service and leadership over the past two and a half years and support his decision to take a leave of absence at this point in time," Nardone said. "Fortress is very well-positioned today, and across our company, we remain single-mindedly focused on managing our investment funds and capitalizing on opportunities to create value for our investors. We look forward to Dan's return in the hope that matters are resolved favorably and expeditiously."

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