* Fortress CEO Mudd received Wells Notice on March 11
* Intends to persuade SEC no civil action should occur
* Wells notice is connected to previous role at Fannie Mae
By Emily Chasan
NEW YORK, March 14 Daniel Mudd, chief executive
of hedge fund Fortress Investment Group LLC (FIG.N), has been
notified by U.S. regulators that he may face civil claims
related to his previous position as president and CEO of
government-sponsored mortgage firm Fannie Mae.
In a regulatory filing on Monday, Fortress said Mudd had
received a "Wells notice" from the Securities and Exchange
Commission, indicating that SEC staff would recommend a civil
enforcement action against him related to his work at Fannie
"Under the SEC's rules, Mr. Mudd is permitted to make a
'Wells submission' in which he seeks to persuade the SEC that
no such action should be commenced. Mr. Mudd has informed the
company that he intends to make such a submission," Fortress
said in the filing.
Mudd was ousted from Fannie Mae, the largest provider of
U.S. residential mortgage funds, in 2008 amid the subprime
crisis. He took the top job at Fortress in 2009.
Fannie Mae and sister entity Freddie Mac FMCC.OB have
been under investigation since September 2008 for their role in
the mortgage crisis. The U.S. Treasury took control of the two
companies at the height of the financial crisis in September
2008 as losses mounted from mortgages gone bad. Both firms have
been subpoenaed for documents as part of a federal grand jury
probe of their accounting.
The SEC and the Federal Bureau of Investigation have also
been probing the companies for possible corporate fraud.
Fortress shares were down 1.6 percent, or 9 cents, at $5.61
in morning trading on the New York Stock Exchange.
(Reporting by Emily Chasan; editing by John Wallace)