By CHAD BRAY And NICK TIMIRAOS
The Securities and Exchange Commission has sued the former chief executives of Fannie Mae and Freddie Mac, accusing them of misleading investors about risks of subprime-mortgage loans.
The lawsuits, filed in Manhattan federal court, also accused four other former executives at Freddie Mac and Fannie Mae of making false and misleading statements about the firms' exposure. The government took over Fannie and Freddie in September 2008 as investors pulled back from the firms, which took heavy losses on souring mortgages they guaranteed. Taxpayers have since provided $151 billion of support.
Former Freddie Mac CEO Richard F. Syron and former Fannie Mae CEO Daniel H. Mudd, are among the six executives. None of them has reached settlement agreements with the SEC.
Earlier this year, the SEC had sent Wells notices, indicating it planned to pursue enforcement actions, to Mr. Syron, Mr. Mudd and several other former executives. Those other executives were: Fannie's Enrico Dallavecchia, a former chief risk officer, and Thomas Lund, a former executive vice president; and Freddie's Patricia Cook, a former executive vice president and chief business officer; and Donald Bisenius, a former senior vice president.
The move came as Fannie Mae and Freddie Mac entered into agreements with the securities regulator to avoid civil prosecution. In the civil non-prosecution agreements, the firms said they would accept responsibility for the conduct and not dispute the SEC's allegations, without admitting or denying wrongdoing, the SEC said.
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