NEW YORK ― Daniel Mudd, the embattled former chief executive of mortgage financing company Fannie Mae, is taking a leave of absence from him current job as head of hedge fund Fortress Investment Group, the company said on Wednesday.
Last week the Securities and Exchange Commission charged Mudd and other top executives at Fannie Mae and Freddie Mac with understating the lenders’ exposure to risky subprime mortgages.
Now he has announced plans to step down for the moment and the company tapped a co-founder, Randal Nardone, to take over.
“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, Mudd said in a statement.
Mudd, who had been forced out at Fannie Mae, said last week that he would fight the SEC charges, and Fortress said the matter was not having an impact on Fortress’s operations.
But its share price, already under pressure all year, sank even lower this week as investors worried about his future and outside analysts speculated that Mudd’s presence might become a further liability for the company.
In mid-morning trading on Wednesday the shares were 2 percent lower at $3.30, leaving them down 41 percent for the year. Rival Och Ziff, another one of the small number of publicly traded hedge funds, has lost more than 47 percent this year.
Mudd, who came to New York-based Fortress in 2009 with a mandate to develop the company’s global growth strategy after co-founder Wes Edens had run the company since its public stock listing in 2007, said it was his choice to step back. He did not say how long he would be gone and the company turned to another co-founder, Nardone, a trained lawyer, to run it.
“We are grateful to Dan for his service and leadership over the past two and a half years and support his decision to take a leave of absence at this point in time,” said Nardone in a company statement. “We look forward to Dan`s return in the hope that matters are resolved favorably and expeditiously.”