Richard Syron, the former chief executive officer of Freddie Mac, settled a Securities and Exchange Commission lawsuit claiming officials understated hundreds of billions of dollars in subprime loans held by the firm and Fannie Mae.
The accord filed in Manhattan federal court on Tuesday comes more than three years after the regulator entered into settlements with the U.S.-owned firms. Also settling are Patricia Cook, a former Freddie Mac executive vice president, and Donald Bisenius, an ex-senior vice president.
Freddie Mac and Fannie Mae are government-sponsored enterprises that issued more than half of all mortgage-backed securities at the time.
The SEC's 2011 lawsuit targeted public statements by the three Freddie Mac executives in 2007 and 2008 about the company's exposure to subprime loans. According to the agency, the executives said the exposure was from $2 billion to $6 billion when it was actually as high as $244 billion.
The former Freddie Mac executives settled without admitting liability.
Under the agreement, the three executives must donate money to the Freddie Mac Fair Fund, set up to reimburse investors, in amounts tied to their stock and option awards during fiscal years 2006 and 2007. Syron will pay $250,000; Cook, $50,000; and Bisenius, $10,000. The three agreed to cooperate with the SEC in any related proceeding.
They also agreed for limited periods not to violate anti-fraud and reporting provisions of U.S. securities laws or sign company reports filed with the agency.
"I am gratified that the SEC has agreed to end its case against me," Bisenius said in a statement Tuesday. "The dismissal of the case today under these terms vindicates me completely."
U.S. District Judge Richard Sullivan on Tuesday approved the agreement.
"The settlement's limitations on future activities and financial payments reflect an appropriate resolution of the matter," Andrew Ceresney, the SEC's director of the Division of Enforcement, said in an email.
