Daniel Mudd, ex-Fannie Mae CEO, takes leave of absense from hedge fund firm


WASHINGTON - FILE: Former Fannie Mae CEO Daniel Mudd (R) testifes along with former Freddie Mac CEO Richard Syron before the House Oversight and Government Reform Committee during a hearing on "The Role of Fannie and Freddie Mac in the Financial Crisis" on Capitol Hill December 9, 2008 in Washington, DC. The U.S. Securities and Exchange Commission (SEC) sued former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron December 16, 2011 for understating the subprime loans held by the agencies by hundreds of billions of dollars. (Photo by Chip Somodevilla/Getty Images) (Chip Somodevilla/GETTY IMAGES)
December 21, 2011

Former Fannie Mae chief executive Daniel Mudd, who was charged with fraud last week by the SEC, is taking a leave of absence from his job as chief executive of hedge fund manager Fortress Investment Group, the firm said Wednesday.

The announcement did not say whether it was an unpaid leave, and the firm did not respond to that question.

“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 news release.

Randal A. Nardone, Fortress principal and co-founder, will serve as interim chief executive officer, effective immediately, the firm said.

Mudd, 53, received a salary of $200,000 and a bonus of $3 million at Fortress last year, plus other compensation of $72,846, much of that for relocation expenses, Fortress said in a regulatory filing.

When he became chief executive of Fortress in 2009, he was given restricted stock valued at $24 million.

“We are grateful to Dan for his service and leadership over the past two and a half years and support his decision to take a leave of absence at this point in time,” Nardone said in the news release. “We look forward to Dan’s return in the hope that matters are resolved favorably and expeditiously.”

Mudd was one of six former executives of Fannie Mae and Freddie Mac sued last week by the Securities and Exchange Commission for allegedly understating the government-sponsored housing finance companies’ exposure to subprime loans and misleading investors about their vulnerability to the mortgage meltdown.

The companies were taken over by the government in 2008 and have received billions of dollars of taxpayer funds to keep operating.

The SEC said Mudd’s misconduct included knowingly giving false testimony to Congress.

Mudd said last week that the government approved Fannie Mae’s disclosures during his tenure.

“Now it appears that the government has negotiated a deal to hold the government, and government-appointed executives who have signed the same disclosures since my departure, blameless — so that it can sue individuals it fired years ago,” he said in a statement last week.

Whether or not the SEC can prove wrongdoing, the cloud of an actual or potential enforcement action can make it difficult for an executive to stay on the job.

In February, a company called CoreLogic announced that Anthony “Buddy” Piszel was resigning as its chief financial officer. Piszel was formerly chief financial officer of Freddie Mac and had received a notice from the SEC that the agency was considering taking action against him.

Piszel was not among the former executives charged last week.

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