The SEC had sued Fannie Mae and Freddie Mac executives with securities fraud, three years after the fact. The fraud charges are about lying to investors over subprime loans.
They knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.
This is a civil case, not a criminal one. Most interesting while going after some ex-executives the SEC lets Fannie and Freddie off the hook. Nothing happens to the two GSEs now.
Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission's litigation against the former executives.
The case is being filed in New York State and the three former executives from Fannie Mae are Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae's Single Family Mortgage business, Thomas A. Lund.
Freddie Macs sacrificial lambs are Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius.
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