Six former top executives at Fannie Mae and Freddie Mac were sued by U.S. regulators on charges of misleading investors about the mortgage finance companies' exposure to risky home loans in the run-up to the 2008 financial crisis.

The U.S. Securities and Exchange Commission brought civil fraud charges on Friday against former Fannie Mae CEO Daniel Mudd, former Freddie Mac CEO Richard Syron and four other one-time high-level executives.

Mudd, now chief executive of Fortress Investment Group, and Syron left the mortgage finance companies after they were taken over by the government in 2008 as mortgage losses spiraled. The two firms have been propped up by $169 billion in federal aid since they were seized.

The SEC is seeking to bar the defendants from serving as officers or directors of public companies, among other penalties.

Fortress, one of the few publicly traded hedge fund and private equity companies, said it would review the matters addressed in the complaint but noted that the lawsuit concerned Mudd's previous job at Fannie Mae.

An attorney for Syron said the SEC case was without merit and relied on a mistaken approach in examining the mortgage giant's disclosures, and said the firm had appropriately disclosed the amount of risk underlying its loans.

Simply stated, there was no shortage of meaningful disclosures, all of which permitted the reader to asses the degree of risk in Freddie Mac's guaranteed portfolio. The SEC's theory and approach are fatally flawed, attorney Thomas Green said.

The other defendants include former Fannie Mae Chief Risk Officer Enrico Dallavecchia, who later became chief risk officer at PNC Financial Services. PNC spokesman Frederick Solomon said Dallavecchia stepped down from his PNC post on Friday and was on administrative leave.

Since Fannie Mae and Freddie Mac nearly went bust, the congressionally chartered firms have repeatedly come under fire in the race for the U.S. Republican presidential nomination. The candidates say the mortgage firms are partly to blame for the foreclosure and housing crisis.

Republican front-runner Newt Gingrich has been harshly criticized by some of his opponents for accepting up to $1.6 million as a consultant to Freddie Mac from 1999 until 2008. Gingrich says he was not a lobbyist but was paid for strategic advice.

The SEC said on Friday that Fannie Mae and Freddie Mac will cooperate with the agency in its lawsuits and have agreed to admit responsibility for the alleged misconduct, without acknowledging or denying liability.

The firms have also entered into non-prosecution agreements with the agency, the SEC said.

MORTGAGE RISKS

In court papers filed in U.S. District Court in Manhattan, the SEC said Mudd, Syron and others approved false statements to investors. The six defendants made it appear that their companies had far less exposure to risky mortgages in their loan portfolios than in fact existed, the SEC contends.

Attorneys for Mudd and Dallavecchia did not immediately respond to requests for comment.

In one episode in 2006, the SEC said, Syron said on an earnings conference call that we, as you know, weren't really involved in underwriting much of that business, any of that business, directly, referring to the subprime loan market.

That statement, the SEC said, was materially false and misleading, because at around that time Freddie Mac's single-family credit guarantee portfolio contained $141 billion worth of subprime loans, 10 percent of its total.

The SEC also charged Thomas Lund, a former executive vice president at Fannie Mae. His lawyer, Michael Levy, said his client did not mislead anyone.

Former Freddie Mac executives Patricia Cook and Donald Bisenius were also charged. Their lawyers did not immediately respond to a request for comment.

The cases come as U.S. lawmakers are turning their attention to tackling the future of the nation's housing finance system. Republicans and Democrats largely agree that Fannie Mae and Freddie Mac eventually need to be shut down. Both companies were chartered by Congress to foster a liquid mortgage market.

MATERIALLY FALSE AND MISLEADING

The SEC is asking the court to order the six defendants to pay back alleged illegal profits. The documents did not specify what amount the SEC would be seeking.

The companies adopted very broad definitions of subprime, leaving reasonable investors to conclude that what was disclosed in their filings was the entirety of their subprime exposure, Robert Khuzami, director of the SEC's enforcement division, said at a news conference.

Investors were robbed of the opportunity to make informed investor choices, he said.

In the Fannie Mae complaint, the SEC said the executives made misleading statements between December 2006 and August 2008. In the Freddie Mac case, the regulator said the alleged wrongdoing took place between March 2007 and August 2008.

Fannie Mae and Freddie Mac buy loans from lenders and repackage them as guaranteed securities for sale to investors.

Freddie Mac, in a statement, said it had reached an agreement with the SEC but did not comment on the charges against its former executives. A Fannie Mae representative did not immediately respond to calls seeking comment.

The cases are SEC v. Daniel Mudd et al., No. 11-9202 and SEC v. Syron et. al No. 11-9201, U.S. District Court for the Southern District of New York.

(Additional reporting by Margaret Chadbourn in Washington and Svea Herbst-Bayliss in Boston; editing by Gerald E. McCormick, Gunna Dickson and John Wallace)