NEW YORK - The Securities and Exchange Commission filed suit against six former top executives from mortgage giants Fannie Mae and Freddie Mac in Manhattan federal court on Friday, for allegedly misleading investors about the size of the companies’ subprime mortgage holdings, the Los Angeles Times reported.

Former Fannie Mae Chief Executive Daniel H. Mudd and former Freddie Mac Chief Executive and Chairman Richard F. Syron were among those sued by the SEC. They are the two highest ranking figures to face charges, the LA Times reported.

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"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, director of the SEC’s Enforcement Division, the LA Times reported. "These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans, and misled the market about the amount of risk on the company’s books."

The cases against the top executives represent the first major action by the SEC in its more than three-year investigation of the government controlled Fannie Mae and Freddie Mac, which were at the center of the housing crisis in 2008, The New York Times reported.

The SEC also announced that the two mortgage giants agreed to settle with regulators and cooperate with its investigation of the former executives. The lawsuits state that the executives understated the lenders’ exposure to subprime mortgage loans. From 2007 to 2008, Fannie Mae said the firm’s exposure to subprime mortgage and reduced documentation loans was about $4.8 billion when it was nearly 10 times greater, according to the SEC, Bloomberg reported.

The lawsuits against Virginia based-Freddie Mac and Washington-based Fannie Mae come in the midst of criticism from judges and lawmakers that said the SEC hasn’t done enough to hold individuals responsible for the housing crisis and financial market collapse, Bloomberg reported. The two non-prosecution agreements require both mortgage companies to accept responsibility for their conduct and to cooperate with the SEC during this probe.

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