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SEC V Syron Resolution April 14 2015
SEC V Syron Resolution April 14 2015
USDS SDNY
DOCUMENT
ELECTRONICALLY FILED
DATE FILED: lf - I '1-
It
Plaintiff,
No. 11-cv-9201 (RJS)
ORDER
-v-
Stipulation, including paragraph 5 thereof. See Kokkonen v. Guardian Life Ins. Co. of Am., 511
U.S. 375, 381 (1994). The Clerk of the Court is respectfully directed to close this case.
SO ORDERED.
Dated:
v.
ECFCASE
RICHARD F. SYRON,
PATRICIA L. COOK, and
DONALD J. BISENIUS,
Defend ants.
WHEREAS, in connection with SEC v. Richard F. Syron, er al., Civil Action No. 1 l-cv9201 (S.D.N.Y.) (the "Case"), the United States Securities and Exchange Commission
("Commission") filed a Complaint against RICHARD F. SYRON ("Syron"), PATRICIA L.
COOK ("Cook"), and DONALD J. BISENIUS ("Bisenius") (collectively, "Defendants"), and the
Defendants filed Answers to the Complaint denying the allegations therein.
WHEREAS, during the relevant period of the Complaint - March 23, 2007 to August 6,
2008 - there was no one universally accepted definition of subprime that was used by market
participants.
WHEREAS, the relevant period was a time when investors were interested in the credit
risks associated with subprime mortgage loans and, during that period, the Federal Home Loan
Mortgage Corporation ("Freddie Mac") published disclosures which addressed the company's
exposure to subprime loans.
WHEREAS, in each such disclosure, Freddie Mac communicated to investors, in
substance, that the company had no significant exposure to subprime Joans in its Single Family
Guarantee portfolio, and that the company held over a hundred billion dollars of non-agency
mortgage-related securities backed by subprime loans in its Retained portfolio.
WHEREAS, the parties dispute the degree to which Freddie Mac's subprime disclosures
were susceptible to misinterpretation on the question of how Freddie Mac quantified its exposure
to subprime loans.
WHEREAS, two central issues in the litigation of this Case have been (i) whether, and to
what extent, Freddie Mac's subprime disclosures communicated to investors that Freddie Mac
considered a mix of credit characteristics indicating a Joan had a higher likelihood of default and
higher loss severities than a prime loan, and not merely a Joan ' s origination channel, in evaluating
whether a particular loan qualified as a "subprime" loan and (ii) whether any Defendant
(i)
Syron agrees to refrain from signing any report required to be filed with
the Commission under Exchange Act Sections 13(a) or 15(d) or any certification required
pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002;
(ii)
Cook agrees to refrain from signing any report required to be filed with the
Commission under Exchange Act Sections 13(a) or 15(d) or any certification required pursuant to
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; and
(iii)
Bisenius, having resigned voluntarily from Freddie Mac in April 2011 and,
having not served as an officer, director or employee of any company since that time, agrees to refrain
from signing any report required to be filed with the Commission under Exchange Act Sections
13(a) or lS(d) or any certification required pursuant to Sections 302 and 906 of the SarbancsOxley Act of 2002.
d.
Each Defendant agrees, pursuant to Section 308(b) of the Sarbanes-Oxley Act of
2002, as amended, to cause the following amounts to be donated, or to donate the following
amounts, to the Freddie Mac Fair Fund established in the unrelated action captioned SEC v.
Federal Home Loan Mortgage Corp., et al., 07-cv-1728 (D.D.C.), for allocation in accordance
with a distribution plan approved by the Court in that proceeding:
(i)
Syron: $250,000
(ii)
Cook: $50,000
(iii)
Bisenius: $10,000
The above-listed amounts reflect relative proportions of Freddie Mac stock and options awards
that were granted to each Defendant in connection with fiscal years 2006 and 2007. Within
fourteen ( 14) days after the Court so-orders this Stipulation, the above listed amounts shall be
provided to the Clerk of the Court for deposit in the Freddie Mac Fair Fund currently held in the
Court Registry Investment Service account ("CRIS"), account number 1:07-cv-1728. Each
payment should be accompanied by a notation that it is for "Freddie Mac Fair Fund 1:07-cv1728" and be sent to the following:
Clerk of the Court,
United States District Court, District of Columbia
333 Constitution Avenue N.W.
Washington D.C. 20001
e.
Within fourteen (14) days of the conclusion of the Syron, Cook, and Bisenius
Agreed Periods, respectively, each Defendant agrees to certify, in writing, his or her compliance
with the undertakings set forth in Paragraphs 3(c) and 3(d) and shall submit the certification by
overnight mail to Suzanne J. Romajas, Esq ., Assistant Chief Litigation Counsel, 100 F Street N.E.,
Washington, DC 20549-5971, with a copy to the Office of Chief Counsel of the Commission's
Division of Enforcement.
COOPERATION
4.
Each Defendant agrees to cooperate fully and truthfully in any other related judicial or
administrative proceeding or investigation commenced by the Commission or to which the
Commission is a party.
EFFECT OF NON-COMPLIANCE
AND THE COMMISSION'S RIGHT TO REFILE
5.
Each Defendant understands and agrees that if he or she fails to comply with the
Undertakings during the applicable Agreed Period, the Commission may refile a Complaint
against the applicable Defendant, thereby effectively resuming this litigation against that
Defendant ("Refiled Case"). Prior to refiling a Complaint against a Defendant, the Commission
shall provide the affected Defendant with twenty-one (21) days' notice of the Commission's
intent to refile, during which time the affected Defendant shall have an opportunity to make a
presentation explaining why a Refiled Case is not appropriate. The Complaint in a Refiled Case
shall be limited to no more than the claims asserted against the applicable Defendant in the
original Complaint. The Commission and each Defendant agree that, if the Commission resumes
4
litigation against that Defendant, the discovery record from this Case may be used in the Refi led
Case and need not be duplicated.
STATUTE OF LIMITATIONS
6.
Each Defendant agrees that the running of any statute of limitations applicable to any
claim asserted in a Refiled Case is tolled and suspended as of December 16, 2011, the date on
which this Case was commenced.
a.
Each Defendant and any of his or her attorneys or agents shall not include the
period between December 16, 2011 and the date on which the Commission receives the
Defendant 's Paragraph 3.e. certification in the calculation of the running of any statute of
limitations or for any other time-related defense in any Refiled Case.
b.
This agreement shall not affect any applicable statute of limitations defense or any
other time-related defense that may have been available to any Defendant before the
commencement of the Case or be construed to revive any claim or request for relief that was
barred by any applicable statute of limitations or any other time-related defense as of December
16, 2011.
c.
Nothing in this or any other provision of this Stipulation and Agreement shall
serve as a time bar to the refiling of a Complaint against any Defendant who shall fail to comply
with the Undertakings during such Defendant 's Agreed Period; and, if it shall be determined that
the refiling is permitted pursuant to this Agreement, any Defendant against whom the Complaint
is refiled hereby waives any right to, and shall not, assert the statute of limitations or any other
time-based defense to the refiling, other than as set forth in Paragraph 6(b). For purposes of the
statute of limitations and other time-based defenses, the Complaint in a Refiled Case shall be
treated for statute of limitations and other time based defenses as if it were the original
Complaint.
VOLUNTARY AGREEMENT
7.
Each Defendant has entered into this Stipulation and Agreement voluntarily and
represents that no threats, offers, promises, inducement or representations other than those
contained in this Stipulation and Agreement, have been made by the Commission or any member,
officer, employee, agent or representative of the Commission.
8.
Each Defendant has read and understands this Stipulation and Agreement. Furthermore,
each Defendant has reviewed all legal and factual aspects of this matter with his or her attorneys.
Each Defendant has thoroughly reviewed this Stipulation and Agreement with his or her
attorneys and has received satisfactory explanations concerning each paragraph of this
Stipulation and Agreement. After conferring with his or her attorneys and considering all
available alternatives, each Defendant has made a knowing decision to enter into this Stipulation
and Agreement.
ENTIRETY OF AGREEMENT
9.
This Stipulation and Agreement constitutes the entire agreement between the Commission
and each Defendant, and supersedes all prior understandings, if any, whether oral or written,
relating to the subject matter herein.
I 0.
This Stipulation and Agreement cannot be modified as to any Defendant or the
Commission except in writing, signed by that Defendant and a representative of the Commission.
11.
In the event an ambiguity or a question of intent or interpretation arises, this Stipulation
and Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption
or burden of proof shall arise favoring or disfavoring the Commission or any Defendant by virtue
of the authorship of any of the provisions of the Stipulation and Agreement.
12.
Each Defendant hereby waives any rights under the Equal Access to Justice Act, the
Small Business Regulatory Enforcement Fairness Act of 1996, or any other provision of law to
seek from the United States, or any agency, or any official of the United States acting in his or
her official capacity, directly or indirectly, reimbursement of attorney's fees or other fees,
expenses, or costs expended by the Defendant to defend against this Case. For these purposes,
the parties agree that no party is the prevailing party in this Case since the parties have reached a
good faith settlement.
CONTINUING JURISDICTION
13.
The Court shall retain jurisdiction of this matter for the purposes of enforcing Paragraph
5 of this Stipulation and Agreement.
The signatories below acknowledge acceptance of the foregoing terms and conditions.
ff ,.,
Dated:
1._, 2015
::curitiZmmission
Matthew P. Cohen, Esq.
Cheryl C. Crumpton, Esq.
David S. Karp, Esq.
Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549-5971
Approved as to form :
Richard F. Syron
Patricia L. Cook
Donald J. Bisenius
The signatories below acknowledge acceptance of the foregoing lt:rms and conditions.
Dated: March _, 20 l 5
Securities and Exchange Commission
By: _ _ _ _ _ _ _ _ _ _ __
Suzanne J. Romajas, Esq.
Matthew P. Cohen, Esq.
Cheryl C. Crumpton, Esq.
David S. l<.!lrp, Esq.
Securities and Exchange Commission
I 00 F Street N.E.
Washington, D.C. 20549-5971
Richard F. Syro;:?
Donald J. Bisenius
The signatories below acknowledge acceptance of the foregoing tenns and conditions.
Dated: March _, 2015
Securities and Exchange Commission
Approved as to fonn :
Donald J. Bisenius
The signatories below acknowledge acceptance of the foregoing terms and conditions.
Dated: March _, 2015
Securities and Exchange Commission
Richard F. Syron
Patricia L. Cook
Donald J.
Bis#s
Dated: _ _ _ _ __