SEC settles with two ex-Fannie Mae executives, but not ex-CEO

Mon Sep 21, 2015 7:52pm EDT
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By Jonathan Stempel

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission has reached a settlement with two former Fannie Mae FNMA.OB executives in one of its biggest lawsuits tied to the financial crisis, but has yet to settle with former Chief Executive Daniel Mudd.

Former Chief Risk Officer Enrico Dallavecchia and former Executive Vice President Thomas Lund will pay $25,000 and $10,000 respectively to settle charges that they helped conceal Fannie Mae's exposure to more than $100 billion of subprime and $341 billion of low-documentation "Alt-A" home loans.

Both denied wrongdoing and agreed to cooperate with the SEC in its case against Mudd, which could increase pressure on him to settle. The SEC said that case could last another year.

The settlement was approved on Monday by U.S. District Judge Paul Crotty in Manhattan.

Mudd's lawyer John Keker, of Keker & Van Nest, did not immediately respond to requests for comment. SEC spokesman John Nester declined to comment.

Monday's settlement means the SEC has been unable to extract major penalties against five of the six former top executives it sued at Fannie Mae and Freddie Mac FMCC.OB.

The government seized both mortgage finance companies on Sept. 7, 2008 and put them into a conservatorship under the Federal Housing Finance Agency, where they remain.

In April, former Freddie Mac Chief Executive Richard Syron, Chief Business Officer Patricia Cook and Vice President of Credit Policy Donald Bisenius agreed to pay a combined $310,000 to resolve the SEC case against them.   Continued...

Ex-Fannie Mae CEO Daniel Mudd, arrives to testify at the U.S. Federal Courthouse in the Manhattan borough of New York March 31, 2015.  REUTERS/Andrew Kelly -