U.S. regulators have notified Daniel Mudd, CEO of Fortress Investment Group, that he may face civil claims due to his previous position as president and CEO of Fannie Mae. Mudd has received a “Wells notice” from the SEC.
(Reuters) – Daniel Mudd, chief executive of hedge fund Fortress Investment Group LLC (FIG.N: Quote, Profile, Research, Stock Buzz), has been notified by U.S. regulators that he may face civil claims related to his previous position as president and CEO of government-sponsored mortgage firm Fannie Mae.
In a regulatory filing on Monday, Fortress said Mudd had received a “Wells notice” from the Securities and Exchange Commission, indicating that SEC staff would recommend a civil enforcement action against him related to his work at Fannie Mae (FNMA.OB: Quote, Profile, Research, Stock Buzz).
“Under the SEC’s rules, Mr. Mudd is permitted to make a ‘Wells submission’ in which he seeks to persuade the SEC that no such action should be commenced. Mr. Mudd has informed the company that he intends to make such a submission,” Fortress said in the filing.
Mudd was ousted from Fannie Mae, the largest provider of U.S. residential mortgage funds, in 2008 amid the subprime crisis. He took the top job at Fortress in 2009.
Fannie Mae and sister entity Freddie Mac (FMCC.OB: Quote, Profile, Research, Stock Buzz) have been under investigation since September 2008 for their role in the mortgage crisis. The U.S. Treasury took control of the two companies at the height of the financial crisis in September 2008 as losses mounted from mortgages gone bad. Both firms have been subpoenaed for documents as part of a federal grand jury probe of their accounting.
The SEC and the Federal Bureau of Investigation have also been probing the companies for possible corporate fraud.
Fortress shares were down 1.6 percent, or 9 cents, at $5.61 in morning trading on the New York Stock Exchange.