Fortress Investment Group CEO Daniel Mudd is one of six former top executives at Fannie Mae and Freddie Mac sued by the SEC on Friday, in a case stemming from the role government-sponsored mortgage firms played in the financial crisis. In May, almost two years after being named chief executive of Fortress, the SEC sent a Wells Notice to Mudd, formally notifying him that he could face civil fraud charges. Along with former Freddie Mac CEO Richard Syron, Mudd is accused of misleading investors over their companies' exposure to soured subprime mortgages through 2008. Both companies were bailed out by almost $170 billion in federal rescue funds. Mudd, 53, was CEO of Fannie Mae from June 2005 until he was ousted in September 2008. In August 2009 he was named CEO of Fortress, of which he had been board member since 2007. Fannie and Freddie have both entered into non-prosecution agreements with the agency, the SEC said. According to John Coffee, a law professor at Columbia University this is bad news for Mudd. "Usually you have the reverse situation, in which individuals cooperate against the companies," said Coffee. "This time all the entities are cooperating with the SEC. They will turn over all the documents, all communications." Mudd remained on active duty at the hedge fund despite the notice. Gordon Runte, a spokesman for Fortress Investment Group, said the complaint filed against Mudd "does not relate to Fortress and this matter has not impacted our company or our business operations." He added that the hedge fund is "undertaking a thorough review of the matters addressed in the complaint."  [Reuters 12/19/11]