Daniel Mudd, the former head of Fannie Mae, is taking a leave of absence from his job as chief executive of Fortress Investment Group, and the alternative-asset manager has appointed co-founder and principal Randal A. Nardone to serve as interim chief executive.
In a regulatory filing last week, the firm said Mudd is facing a civil complaint filed by the Securities and Exchange Commission "in connection to his service to his previous employer, Fannie Mae."
"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.
Fortress said in an earlier regulatory filing that claims against Mudd predate his employment with Fortress and aren't directed to Fortress.
Fortress shares were 0.3% lower at $3.36 recently.
"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. "We look forward to Dan's return in the hope that matters are resolved favorably and expeditiously."
The Securities and Exchange Commission has charged six former top executives of Fannie Mae and Freddie Mac, including Mudd, with securities fraud, alleging "they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans."
Mudd said earlier this week he would vigorously contest the charges.
Nardone, who takes over Fortress's helm immediately, has been working with another of the firm's co-founders, Wesley R. Edens, on private-equity operations.
The management change keeps intact the current structure of Edens heading private-equity business, Peter L. Briger Jr. leading credit operations and Michael E. Novogratz in charge of liquid- investments strategies.
Prior to co-founding Fortress in 1998, Nardone was a managing director of UBS and a principal of BlackRock Financial Management Inc.
Fortress had $43.6 billion assets under management as of September 2011.
This story first appeared on WSJ.com.
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