DealBook: Embattled Fortress Chief Takes Leave of Absence

Mark Wilson/Getty ImagesDaniel H. Mudd testifying before a House panel in 2007, when he was head of Fannie Mae.

Daniel H. Mudd, who faces accusations that he misled investors while he was the top executive of Fannie Mae, is taking a leave of absence from his role as chief executive of the Fortress Investment Group, the company announced on Wednesday.

Last week, the Securities and Exchange Commission sued Mr. Mudd and five other former executives at Fannie Mae and Freddie Mac, the two mortgage-finance giants brought low by the housing bubble. In one of the most significant federal actions taken against crucial players in the mortgage crisis, the S.E.C. accused Mr. Mudd of playing down Fannie Mae’s exposure to risky loans.

Mr. Mudd and the other executives have vowed to challenge the accusations, noting that Fannie and Freddie routinely disclosed their exposure to risky loans in regulatory filings. Mr. Mudd has said that the suit is driven by politics, not substance.

But while he fights the S.E.C., Mr. Mudd has decided to step away from Fortress. It is unknown how long his leave of absence will last.

“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,” Mr. Mudd said in a statement.

Mr. Mudd started at Fortress in July 2009, after the government pushed him out of his role as the chief executive of Fannie Mae.

While Mr. Mudd has helped revive Fortress after its shares suffered a sharp decline, certain businesses have continued to struggle and the stock is trading at about $3.30. The firm has about $44 billion in assets under management in a variety of hedge funds, private equity funds and mutual funds.

He will be succeeded, at least temporarily, by Randal A. Nardone, who co-founded Fortress. Prior to starting Fortress, Mr. Nardone worked at UBS and BlackRock Financial. While Mr. Nardone does not have the public profile of Mr. Mudd, he is known for his deep knowledge of the private equity business, which is one Fortress’s main focuses.

“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,” Mr. Nardone said in a statement. “We look forward to Dan’s return in the hope that matters are resolved favorably and expeditiously.”

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