You are here

Crisis-linked case against Fannie Mae CEO resolved

39608360 - 23_08_2016 - FILES-US-FINANCE-HOUSING-JUSTICE-LITIGATION.jpg
A five-year-old securities fraud case rooted in the financial crisis against the former chief executive of mortgage giant Fannie Mae ended Monday in stalemate, court filings showed.

[WASHINGTON] A five-year-old securities fraud case rooted in the financial crisis against the former chief executive of mortgage giant Fannie Mae ended Monday in stalemate, court filings showed.

The US Securities and Exchange Commission and the CEO, Daniel Mudd, decided to resolve the case being tried in civil court with no finding of guilt or innocence.

The two sides "agree that no party is the prevailing party in this case," they said.

The agreed "that it is not in the interest of justice to continue to litigate this matter."

After the massive 2008 bailout of Fannie Mae and sister mortgage firm Freddie Mac in the financial collapse, in 2011 the SEC filed securities fraud charges against six former executives of the companies.

The SEC said the executives approved misleading statements that claimed the companies held low levels of risky sub-prime mortgage loans.

The statements were made in 2007-2008, as the housing market crashed and US financial institutions were rocked by losses tied to millions of bad home loans and the securities they underpinned.

The SEC had argued that Fannie and Freddie executives had defrauded shareholders - including the government - by vastly understating the weakness of their own loan holdings.

Mudd's case was the last of the six, which likewise were inconclusive.

The agreement to conclude the case included a stipulation that Mudd will "contribute" US$100,000 to the US Treasury, with no explanation given as to what that represented.

Mudd's total compensation in 2007, before the bailout which left Fannie and Freddie under government control and supervision until today, was US$11.6 million.

AFP