SEC settles with two ex-Fannie Mae executives, but not ex-CEO
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, and the two men agreed as part of the deal to cooperate with the SEC in its case against former Chief Executive Daniel Mudd.
Fannie Mae's 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 the company's exposure to more than $100 billion of subprime and $341 billion of low-documentation "Alt-A" home loans.
Both denied wrongdoing. Their agreement to cooperate with the SEC in its case against Mudd 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, in a statement, called the SEC charges "false" and "politically motivated” and said Fannie Mae's disclosures had been accurate. "I have never contemplated accepting the SEC’s retrospective revision of the facts, and I have declined to engage in any settlement discussions," he said.
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. Continued...