The Securities and Exchange Commission has filed complaints against three former executives at Fannie Mae – its chief executive, Daniel H. Mudd; chief risk officer, Enrico Dallavecchia; and executive vice president, Thomas A. Lund.
Freddie Mac’s former chief executive, Richard F. Syron; Patricia Cook, its chief business officer; and its executive vice president, Donald J. Bisenius, were also named in a separate complaint.
http://dealbook.nytimes.com/...
The civil complaints allege that the executives did not adequately disclose their firms' exposure to risky mortgages.
Remember that actions are "fraud" in a securities context when they would not be fraud in other contexts. It is not necessary, for securities fraud, that the defendants had fraudulent intent, or even that the underlying actions be illegal. It is only necessary that they did not make necessary disclosures.
“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” Robert Khuzami, the head of enforcement for the S.E.C., said in a statement. “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. 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.”
I know that lots of people wonder why criminal complaints haven't been brought against any bank executives. As a person who made a good living as a lawyer suing brokerage houses, I can give you my opinion: their acts weren't criminal. The roll back of regulation left them free to do what they did, without criminal liability. The lack of criminal prosecutions doesn't mean (as some would have it) that the DOJ is asleep at the switch or in bed with the banksters. It means what every prosecutor knows: You can't bring a case if you know you can't win.
But civil securities fraud is another matter. Just expressing an opinion that turns out to be wrong can be securities fraud (because you didn't have a reasonable basis for believing what you believed). Securities fraud laws are powerful weapons, as these six people are finding out.