The Securities and Exchange Commission has settled a crisis-era
suit that accused three former executives of mortgage firm Freddie
Mac of downplaying the risks of the firm's foray into subprime
loans, according to a court order Tuesday.
The case involved former Freddie Mac Chief Executive Richard
Syron, former business chief Patricia Cook and former vice
president Donald Bisenius.
As part of the settlement, the executives have agreed to donate
or have donated on their behalf amounts ranging from $10,000 to
$250,000. The amounts are proportional to the executives' stock and
option awards during the 2006 and 2007 fiscal years, the order
states.
In 2011, the SEC filed civil suits in Manhattan federal court
against six former executives at mortgage firms Freddie Mac and
Fannie Mae. At the time, the civil lawsuits ranked among the
highest-profile crisis-related cases the government had
brought.
At the heart of the lawsuits was the government's contention
that Fannie and Freddie executives knowingly misled investors about
the volumes of risky mortgages that the companies were purchasing
as the housing boom turned to bust. The Fannie Mae case is
ongoing.
The SEC originally had sought financial penalties, disgorgement
and an order barring the former executives from serving as officers
and directors of other companies.
Tuesday's court order said that the SEC and Freddie Mac
executives agreed that it was "not in the interest of justice" to
continue litigating the matter, "without conceding the strengths or
weaknesses of their respective claims and defenses."
"The settlement's limitations on future activities and financial
payments reflect an appropriate resolution of the matter," said
Andrew Ceresney, director of the SEC's division of enforcement.
Mr. Bisenius said in a statement that he has agreed not to make
certifications required of CEOs and CFOs of public companies for a
limited period of time.
"I am gratified that the SEC has agreed to end its case against
me," he said. "The dismissal of the case today under these terms
vindicates me completely."
Ms. Cook's attorney, Steven Salky, said in a statement that
insurance will cover her required $50,000 donation. "Extensive
discovery of facts led to this favorable outcome," Mr. Salky said
in the release.
Mr. Syron's attorney didn't immediately respond to a request for
comment.
Write to Chelsey Dulaney at chelsey.dulaney@wsj.com
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