The SEC has served so-called Wells notices on Richard Syron, former chief executive of Freddie Mac, and Daniel Mudd, former chief executive of Fannie Mae, that it is considering taking enforcement action against them for misleading investors.
Syron and Mudd both have the opportunity to respond to challenge the accusations before charges are filed.
The move forms part of the SEC’s long-running investigation into the mortgage lending giants and how they reported their subprime portfolios. It follows Wells notices being served to other senior figures within the firms.
The US government was forced to nationalise the sister lenders from the brink of collapse in September 2008, a week before Lehman Brothers went bust, owing to its exposure to billions of dollars in subprime deals.
Syron’s lawyer said that any proposed charges were without merit.
In a statement to Bloomberg, Mudd, now chief executive of hedge fund Fortress Investment Group, said his response would “make clear why the SEC staff should not pursue any action in this matter”.
He said: “The disclosures and procedures that are the subject of the staff’s investigation were accurate and complete. These disclosures were previewed by federal regulators, and have been issued in the same form since the company went into government conservatorship.”
