(TheNicheReport) -- The search for culprits and responsible parties behind the bursting of the American housing bubble, the credit crunch, the subprime mortgage meltdown, and the global financial crisis continues. In December of 2011, the United States Securities and Exchange Commission (SEC) filed civil lawsuits against former executives at the two government-sponsored mortgage giants Fannie Mae and Freddie Mac. These lawsuits are seen by legal experts as ways to effectively point fingers and shame individuals who may have played a role in the financial meltdown, and the defendants are refusing to be singled out without a fight.
Former Fannie Mae CEO Daniel Mudd
Daniel Mudd has been accused by the SEC of fraud. The former CEO of Fannie Mae was summarily dismissed by the government from his position back in September of 2008, an unforgettable month for Wall Street and the investment world. Mr. Mudd then took a high-paying position at Fortress Investment Group, a hedge fund that has the distinction of being publicly traded and listed on the New York Stock Exchange.
According to a recent article on Business Week, the executive board of the Fortress Investment Group offered Mr. Mudd to keep his job as long as he could settle the matter quickly and quietly. He refused and left the company just to organize his legal fight against the charges leveled against him by the SEC. He is resolute on the matter, and he does not believe that he engaged in fraud.
The latest strategy from Mr. Mudd's legal team is a Motion to Dismiss based on the mortgage information that Fannnie Mae filed during the period he was at the helm of the company. His attorneys maintain that there was no motive on Mr. Mudd's part to commit fraud or to trick shareholders and investors of the Fannie Mae.
Legal analysts view the case as the SEC trying to send a message to the public by making an example of former executives like Daniel Mudd. Should he be found guilty, there is not much he could do in term of reparations, save for apologies. Bailing out Fannie Mae has already cost taxpayers billions, and Mr. Mudd is unlikely to be able to repay such losses. The SEC, however, is recommending to the court that the accused former executives be barred from serving as officers in publicly-traded companies -something akin to a scarlet letter.
This case will also create an important precedent for the SEC; should the agency continue looking for culprits of the mortgage mess the United States is currently in, Mr. Mudd's destiny could be a blueprint for future actions.