Daniel Mudd will take a leave of absence as CEO of Fortress Investment Group after he was sued by the SEC over his role as former CEO of Fannie Mae.
Fortress co-founder Randal A. Nardone will take over as interim CEO effective immediately, the New York-based manager of buyout and hedge funds said Wednesday in a statement.
“I have requested a leave of absence from my position as chief executive officer to ensure that any time or attention I need to focus on matters outside of Fortress will not affect the business or operations of the company,” Mr. Mudd said in the statement.
Mr. Mudd and former Freddie Mac CEO Richard Syron were sued Dec. 16 for understating by hundreds of billions of dollars the subprime loans held by the firms. Fannie Mae, the government- sponsored enterprise that issues almost half of all mortgage- backed securities, and mortgage company Freddie Mac had “agreed to accept responsibility” for their conduct, the SEC said.
In a statement the day the lawsuit was filed in U.S. District Court in New York, Mr. Mudd denied the charge, saying the U.S. government and its investors were aware of “every piece of material data about loans held by Fannie Mae.”
Fortress said in a Dec. 16 statement that the complaint against Mr. Mudd “does not relate to Fortress, and this matter has not impacted our company or our business operations.”
In the suit, the SEC said it wants financial penalties and disgorgement, and an order barring Mr. Mudd from serving as an officer or director of another company.