NEW YORK, N.Y. – A New York judge says a former Fannie Mae top executive must face a civil trial over Securities and Exchange Commission charges he misled investors about subprime mortgages before the housing bubble burst.
Federal Judge Paul Crotty in Manhattan ruled Monday. He said it was possible a jury could conclude ex-CEO Daniel Mudd acted with intent or recklessness.
Defence attorney John Keker urged the judge in January to dismiss the charges. He said there’s no evidence to support the allegation Mudd understated the level of high-risk subprime mortgages Fannie Mae held.
Fannie Mae is a government-controlled company that helps provide money for the housing market by buying mortgages and packaging loans for sale to investors. Mudd led Fannie Mae in 2007, when home prices began collapsing.
The SEC says Mudd misled investors about billions of dollars in subprime loans.