Former Freddie, Fannie CEOs deceived investors over subprime exposure: suit

New York /
Dec.December 16, 2011 01:44 PM

A lawsuit filed in Manhattan Federal Court today accuses former executives of Freddie Mac and Fannie Mae, including former CEOs of both firms, of misleading investors about their exposure to subprime mortgages, the Wall Street Journal reported.

Former Freddie CEO Richard Syron and former Fannie CEO Daniel Mudd, are among the six executives named in the suit, the Journal said. Earlier this year, the SEC had informed the executives it planned to pursue actions against them.

The suit was timed to coincide with Fannie and Freddie entering into agreements with the commission to avoid civil prosecution, the Journal said. In the agreements, Fannie and Freddie will “accept responsibility for the conduct and not dispute the SEC’s allegations, without admitting or denying wrongdoing,” the SEC told the Journal. Fannie and Freddie will also assist in the case against the executives as part of the agreement.

“Material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans, and [they] misled the market about the amount of risk on the company’s books,” said Robert Khuzami, director of the SEC’s enforcement division. [WSJ]


Related Articles

arrow_forward_ios
Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply. (iStock)
Fannie, Freddie say housing market could see slight hiccup
Fannie, Freddie say housing market could see slight hiccup
New Fannie Mae and Freddie Mac restrictions mean higher mortgage rates for some. (Unsplash)
Mortgage rates on second homes rise as Fannie, Freddie pull back
Mortgage rates on second homes rise as Fannie, Freddie pull back
Meridian Capital Group CEO Ralph Herzka, Former Freddie Mac CEO David Brickman and  Barings CEO Mike Freno (Herza by Studio Scrivo; Brickman by Freddie Mac; Freno via Barings)
Ex-Freddie Mac boss looks to become top agency-backed CRE lender
Ex-Freddie Mac boss looks to become top agency-backed CRE lender
Former Freddie Mac CEO David Brickman and Meridian Capital Group CEO Ralph Herzka (Freddie Mac; Herza by Studio Scrivo)
Ex-Freddie Mac CEO launching lending platform with Meridian, Barings
Ex-Freddie Mac CEO launching lending platform with Meridian, Barings
Treasury Secretary Steven Mnuchin with Donald Trump. (Getty)
Treasury quits bid to privatize Fannie Mae, Freddie Mac
Treasury quits bid to privatize Fannie Mae, Freddie Mac
FHFA director Mark Calabria (Getty; iStock)
Federal housing agency extends forbearance options for multifamily landlords
Federal housing agency extends forbearance options for multifamily landlords
Future of Fannie, Freddie privatization is uncertain
Future of Fannie, Freddie privatization is uncertain
Future of Fannie, Freddie privatization is uncertain
(iStock)
Foreclosure filings are way down. There’s a reason
Foreclosure filings are way down. There’s a reason
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...