A much-hyped financial crisis lawsuit against two former Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) executives was closed after the two executives agreed to settle SEC charges and pay a total sum of $35,000. The SEC had filed charges against the company’s ex-CRO, Enrico Dallavecchia, and the Head of single family lending unit, Mr. Thomas Lund, in year 2011, accusing them of hiding massive amount in risky mortgages from investors.
The update
Andrew J. Levander, an attorney for Dallavecchia, stated that they didn’t pay any penalties in the case settlement. They are delighted to reach conformity that disregards baseless allegations, avoids the time and costs of further extended litigation and allows Dallavecchia to become a part of a publicly traded firm if he so chooses.
A lawyer for Lund stated that his client had been proved innocent and therefore he wouldn’t be compensating out of his own pocket. The deal permits Federal National to make the compensation on behalf of the ex-executives. This settlement comes after a similar agreement recorded in April 2015 with three ex- executives of Freddie Mac. In the Freddie lawsuit, the former executives agreed to compensate a total sum of $310,000.
The highlights
The initial allegations against Freddie Mac and Federal National came amid much public and fanfare calls for executives to be held liable for financial-crisis bloopers. The SEC had accused that the executives had expressed that the two mortgage giant firms had little subprime exposure, even as they increased loan purchases that had subprime features.
However, the recent concord deal with Federal National expresses a different tone. It stated that both sides, which have preceded the case in last four years, believed the case would continue for at least another year. The SEC and ex-executives agreed to settle case without compromising on the weaknesses or strength of their respective defenses and claims.
It was not a very active session for Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) yesterday as it ended the last trading session with a minor gain of 0.44%. The volume remained low at 2 million, almost the same with the daily average. The chart attached shows the long term contraction phase going on for the last 12 months and most probably, the range is ready to expand soon. The expansion of volatility and price will trigger a trending move. Though it is difficult to predict the next direction, the lack of bearish momentum to the downside keeps the bullish option open.
