SEC Files Suit Against Former GSE Execs

The ""Securities and Exchange Commission"":http://www.sec.gov/ (SEC) filed suit against former executives with ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/ Friday over their alleged roles in securities fraud.

Former CEOs Daniel Mudd, with Fannie, and Richard Syron, with Freddie, topped a list of other onetime executives charged with misstating material information about subprime mortgages on their companies' books.

Other executives charged with securities fraud in the case

include Enrico Dallavecchia and Thomas Lund, with Fannie, and Patricia Cook and Donald Bisenius, with Freddie.

""Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,"" said Robert Khuzami, director of enforcement for the SEC.

""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,"" he added. ""All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country's investors.""

The SEC suit purports that Fannie's executives underreported considerable exposure to forces in the market, with $4.8 billion in single-family loans on the books.

For its part, the suit alleges, Freddie misled investors with claims that the GSE attached a different name to $43.3 billion in single-family loans in a report it filed publicly back in February 2007.