Ex-Fannie CEO Mudd leaves Fortress after SEC charges

@CNNMoney December 21, 2011: 9:52 AM ET
Former Fannie Mae CEO Daniel Mudd is leaving his post as CEO of Fortress Investment Group following SEC charges of fraud.

Former Fannie Mae CEO Daniel Mudd is leaving his post as CEO of Fortress Investment Group following SEC charges of fraud.

NEW YORK (CNNMoney) -- Daniel Mudd is taking an immediate leave of absence from his role as CEO of investment firm Fortress Investment Group, less than a week after the Securities and Exchange Commission announced fraud charges against him and other former executives of Fannie Mae and Freddie Mac.

Mudd, who has headed Fortress (FIG) since August 2009, had been CEO of mortgage finance firm Fannie Mae (FNMA, Fortune 500) until its collapse in 2008.

"I have requested a leave of absence from my position as chief executive officer to ensure that any time or attention I need to focus on matters outside of Fortress will not affect the business or operations of the company," Mudd said in a statement from Fortress.

He was forced out as CEO of Fannie when the government took control of both that firm and rival Freddie in September 2008 due to massive losses on home loans they owned or guaranteed.

On Friday the SEC charged Mudd, two other former Fannie Mae executives and three former executives of Freddie Mac (FMCC, Fortune 500), including ex-CEO Richard Syron, with securities fraud for misrepresenting their holdings of high-risk mortgage loans.

"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," SEC enforcement chief Robert Khuzami said in a statement. "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."

Mudd issued a statement at the time of the charges refuting the SEC claims, saying the agency was wrong to bring the case.

"Every piece of material data about loans held by Fannie Mae was known to the United States government and to the investing public," he said.

Randal A. Nardone, Fortress principal and co-founder, will replace Mudd as interim CEO. The investment management firm, founded in 1998, oversaw $43.6 billion in assets as of September 30, 2011. Its shares declined 5% in pre-market trading Wednesday following the announcement. To top of page

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