Judge: Ex-Fannie Mae boss must face SEC-led civil trial
NEW YORK (AP) — A former Fannie Mae top executive must face a civil trial over Securities and Exchange Commission charges he misled investors about subprime mortgages before the housing bubble burst, a judge has ruled.
A jury could conclude ex-CEO Daniel Mudd acted with intent or recklessness, U.S. District Judge Paul Crotty in Manhattan said in a decision Monday.
"The same evidence that would support a finding that Mudd acted recklessly would necessarily support a finding that he acted negligently," the judge said.
The judge said the SEC had produced evidence that Mudd knew or should have known his public statements and Fannie Mae disclosures he reviewed, edited and certified were materially false and misleading.
Defense attorney John Keker urged the judge in January to dismiss the charges. He said there's no evidence to support the allegation Mudd understated the level of high-risk subprime mortgages Fannie Mae held. He did not immediately return a message seeking comment Tuesday.
Fannie Mae is a government-controlled company that helps provide money for the housing market by buying residential mortgages and packaging pools of those loans for sale to investors. The company, whose name is short for Federal National Mortgage Association, was seized by the government in 2008 and is overseen by the Federal Housing Finance Agency.
Mudd led Fannie Mae in 2007, when home prices began collapsing. The SEC says he misled investors about billions of dollars in subprime loans.