In one of the U.S. Securities and Exchange Commission’s biggest cases tied to the 2008 financial crisis, former Fannie Mae (FNMA.PK) Chief Executive Daniel Mudd has reached a settlement with regulators, according to court papers filed on Monday.
The deal with the SEC, detailed in papers filed in Manhattan federal court, resolves a 2011 lawsuit accusing Mudd of misleading investors about Fannie’s exposure to risky mortgages before the crisis.
Mudd had denied wrongdoing and he did not admit any in the Monday agreement. The deal concludes one of the SEC’s few remaining cases tied to the housing downturn.
Mudd was one of six executives at mortgage funding giants Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK) sued by the SEC. The prosecutions were announced at a press conference in December 2011 but they ended in modest settlements over the following years.
Under terms of the latest deal, Fannie Mae will contribute $100,000 on Mudd’s behalf to a Treasury Department account that receives financial gifts to the United States, according to documents.
Fannie’s former chief risk officer, Enrico Dallavecchia, and former Executive Vice President, Thomas Lund, agreed to similar terms when they settled for $25,000 and $10,000 respectively in September 2015.
A Fannie Mae spokesman declined to comment on the Mudd case. The SEC did not immediately respond to calls for comment.
Mudd had continued to litigate alone after Lund and Dallavecchia settled last year and he was due to face trial in November.
“I appreciate Fannie Mae and the current leadership of the SEC stepping in to end a case that should have never been brought,” Mudd told Reuters.
Mudd led Fannie Mae as a national housing bubble grew to bursting point from December 2004 to September 2008, when the Treasury Department effectively took control of the company.
That same month, Lehman Brothers Holdings Inc filed for bankruptcy as Wall Street was rattled by a wave of mortgage defaults.
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Officials injected taxpayer money to stabilize Fannie and it’s sibling Freddie which were conceived by Washington to promote home ownership and had helped underwrite a share of the easy-to-get subprime loans.
The SEC had accused Mudd and the five other Fannie and Freddie executives of downplaying the companies’ exposure to risky loans.
The SEC said Fannie Mae concealed exposure to more than $100 billion of subprime and $341 billion of Alt-A loans – another class of mortgage offered to risky borrowers.
Former Freddie Mac chief Richard Syron as well as former executives Patricia Cook and Donald Bisenius previously settled their cases for $250,000, $50,000 and $10,000, respectively.
The case is U.S. Securities and Exchange Commission v. Mudd, U.S. District Court, Southern District of New York, No. 11-9202.
(Reporting by Nate Raymond in New York; Editing by Bernadette Baum and Andrew Hay)