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To Settle SEC Case, Government Pays Itself $100,000

Former Fannie Mac CEO reaches agreement that places no restrictions on future work

Former Fannie Mae chief executive  Daniel Mudd reached a “settlement” with the Securities and Exchange Commission in a crisis-era case it filed against him. The deal, filed on Monday, requires essentially nothing of Mr. Mudd.

The settlement includes a $100,000 payment—to be paid by Fannie Mae, which already pays its profits to the U.S. Treasury because it landed in government conservatorship in 2008. “One could see this as the government paying itself $100k to end the case,” Mr. Mudd said in an email.

The settlement also included no restrictions on Mr. Mudd’s future work, an “unprecedented” win, according to Mr. Mudd’s lawyer, James Wareham.

It is a remarkable end to a high-profile set of lawsuits the agency filed in 2011, when it sued six executives of the mortgage giants Fannie Mae and Freddie Mac, accusing them of misconduct tied to the 2008 financial crisis.

The cases accused the men—three from Fannie and three from Freddie—of allegedly misleading investors in the mid-2000s about the mortgage finance firms’ subprime holdings. It charged them with securities fraud, and announced the cases at a December 2011 press conference in conjunction with “nonprosecution agreements” the SEC reached with the two firms.

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