A federal judge has ruled that former Fannie Mae CEO Daniel Mudd will have to face a civil trial on charges by the SEC that he misled investors about subprime mortgages during the run-up to the housing meltdown, according to an ABC News report.
Defense attorney John Keker had called for dismissal of the charges in January, saying there was no evidence that Mudd understated the level of subprime mortgages held by Fannie Mae. But U.S. District Judge Paul Crotty ruled this week that a jury might conclude Mudd acted with intent or recklessness, ABC News reported.
“The same evidence that would support a finding that Mudd acted recklessly would necessarily support a finding that he acted negligently,” Crotty said.
Crotty ruled that the SEC had produced evidence that Mudd either knew or should have known that Fannie Mae disclosures he reviewed – and his own public statements – were false and misleading, ABC News reported.
Mudd was in charge of Fannie Mae in 2007 when the housing collapse began. The agency was taken into government conservatorship in 2008 to save it from collapse.
The former head of Fannie Mae is headed to court.