The Securities and Exchange Commission brought civil charges Friday against former Fannie Mae CEO Daniel Mudd, 53, former Freddie Mac CEO Richard Syron, 68, and four other ex-officers. The charges were brought in the U.S. District Court in Manhattan.
They are charged with blatantly falsifying the extent of the companies’ exposure to risky home loans from 2006 through 2008. If the court agrees with the SEC, the executives will have to pay back illegal profits and penalties.
Fannie and Freddie, which have received $169 billion in government aid since the financial crisis erupted in 2008, are cooperating with the Commission and will admit responsibility to the alleged conduct, without admitting to or denying guilt.
“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, director of the SEC’s division of enforcement. “These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans—and misled the market about the amount of risk on the company’s books.”