exv10w2



 







Exhibit 10.2




UNITED STATES DISTRICT COURT

DISTRICT OF COLUMBIA









SECURITIES AND EXCHANGE

COMMISSION,

100 F Street, NE

Washington, DC 20549,




Plaintiff,





     v.



FEDERAL NATIONAL MORTGAGE

ASSOCIATION,

3900 Wisconsin Avenue, NW

Washington, DC 20016




Defendant.









 









CONSENT OF DEFENDANT FEDERAL NATIONAL MORTGAGE ASSOCIATION




     1. Defendant Federal National Mortgage Association (“Defendant”) waives service
of a summons and the Complaint in this action, enters a general appearance, and admits the
Court’s jurisdiction over Defendant and over the subject matter of this action.



     2. Without admitting or denying the allegations of the Complaint (except as to
personal and subject matter jurisdiction, which Defendant admits), Defendant hereby consents to
the entry of the final Judgment in the form attached hereto (the “Final Judgment”) and
incorporated by reference herein, which, among other things:




	 	(a)	 	permanently restrains and enjoins Defendant from violation of Sections
10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act
of 1934 (“Exchange Act”) [15 U.S.C. §§
78j(b); 78m(a); 78m(b)(2)(A); and 78m(b)(2)(B)], and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13




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	 	 	 	[17 C.F.R. §§ 240.10b-5; 240.12b-20; 240.13a-1; 240.13a-11; and
240.13a-13] promulgated thereunder, and Sections 17(a)(2) and (3) of the
Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(2) and (3)];






	 	(b)	 	orders Defendant to pay disgorgement in the amount of $1; and






	 	(c)	 	orders Defendant to pay a civil penalty in the amount of $350,000,000
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and
Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].





     3. Defendant acknowledges that the civil penalty paid pursuant to the
Final Judgment may be distributed pursuant to the Fair Fund provisions of Section 308(a) of the
Sarbanes-Oxley Act of 2002. Regardless of whether any such Fair Fund distribution is made, the
civil penalty shall be treated as a penalty paid to the government for all purposes, including all
tax purposes. To preserve the deterrent effect of the civil penalty, Defendant agrees that it
shall not, after offset or reduction of any award of compensatory damages in any Related Investor
Action based on Defendant’s payment of disgorgement in this action, argue that it is entitled to,
nor shall it further benefit by, offset or reduction of such compensatory damages award by the
amount of any part of Defendant’s payment of a civil penalty in this action (“Penalty Offset”). If
the court in any Related Investor Action grants such a Penalty Offset, Defendant agrees that it
shall, within 30 days after entry of a final order granting the Penalty Offset, notify the
Commission’s counsel in this action and pay the amount of the Penalty Offset to the United
States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall not be
deemed an additional civil penalty and shall not be deemed to change the amount of the civil
penalty imposed in this action. For purposes of this paragraph, a “Related Investor Action”



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means a private damages action brought against Defendant by or on behalf of one or more
investors based on substantially the same facts as alleged in the Complaint in this action.



     4. Defendant agrees that it shall not seek or accept, directly or
indirectly, reimbursement or indemnification from any source, including but not limited to payment made
pursuant to any insurance policy, with regard to any civil penalty amounts that Defendant pays
pursuant to the Final Judgment, regardless of whether such penalty amounts or any part thereof
are added to a distribution fund or otherwise used for the benefit of investors. Defendant further
agrees that it shall not claim, assert, or apply for a tax deduction or tax credit with regard to
any federal, state, or local tax for any penalty amounts that Defendant pays pursuant to the Final
Judgment, regardless of whether such penalty amounts or any part thereof are added to a
distribution fund or otherwise used for the benefit of investors.



     5. Defendant waives the entry of findings of fact and conclusions of law pursuant to
Rule 52 of the Federal Rules of Civil Procedure.



     6. Defendant waives the right, if any, to a jury trial and to appeal from the entry of
the Final Judgment.



     7. Defendant enters into this Consent voluntarily and represents that no threats,
offers, promises, or inducements of any kind have been made by the Commission or any
member, officer, employee, agent, or representative of the Commission to induce Defendant to
enter into this Consent.



     8. Defendant agrees that this Consent shall be incorporated into the Final Judgment
with the same force and effect as if fully set forth therein.



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     9. Defendant will not oppose the enforcement of the Final Judgment on the ground,
if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and
hereby waives any objection based thereon.



     10. Defendant waives service of the Final Judgment and agrees that entry of the Final
Judgment by the Court and filing with the Clerk of the Court will constitute notice to Defendant
of its terms and conditions. Defendant further agrees to provide counsel for the Commission,
within thirty days after the Final Judgment is filed with the Clerk of the Court, with an affidavit
or declaration stating that Defendant has received and read a copy of the Final Judgment.



     11. Consistent with 17 C.F.R. 202.5(f), this Consent resolves only the claims asserted
against Defendant in this civil proceeding. Defendant acknowledges that no promise or
representation has been made by the Commission or any member, officer, employee, agent, or
representative of the Commission with regard to any criminal liability that may have arisen or
may arise from the facts underlying this action or immunity from any such criminal liability.
Defendant waives any claim of Double Jeopardy based upon the settlement of this proceeding,
including the imposition of any remedy or civil penalty herein. Defendant further acknowledges
that the Court’s entry of a permanent injunction may have collateral consequences under federal
or state law and the rules and regulations of self-regulatory organizations, licensing boards, and
other regulatory organizations. Such collateral consequences include, but are not limited to, a
statutory disqualification with respect to membership or participation in, or association with a
member of, a self-regulatory organization. This statutory disqualification has consequences that
are separate from any sanction imposed in an administrative proceeding. In addition, in any
disciplinary proceeding before the Commission based on the entry of the injunction in this



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action, Defendant understands that it shall not be permitted to contest the factual allegations of
the Complaint in this action.



     12. Defendant understands and agrees to comply with the Commission’s policy “not
to permit a defendant or respondent to consent to a judgment or order that imposes a sanction
while denying the allegation in the complaint or order for proceedings.” 17 C.F.R. § 202.5. In
compliance with this policy, Defendant agrees: (i) not to take any action or to make or permit to
be made any public statement denying, directly or indirectly, any allegation in the Complaint or
creating the impression that the Complaint is without factual basis; and (ii) that upon the filing
of this Consent, Defendant hereby withdraws any papers filed in this action to the extent that they
deny any allegation in the Complaint. If Defendant breaches this agreement, the Commission
may petition the Court to vacate the Final Judgment and restore this action to its active docket.
Nothing in this paragraph affects Defendant’s: (i) testimonial obligations; or (ii) right to take
legal or factual positions in litigation or other legal proceedings in which the Commission is not
a party.



     13. 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 Defendant to defend against this action. For these purposes,
Defendant agrees that Defendant is not the prevailing party in this action since the parties have
reached a good faith settlement.



     14. In connection with this action and any related judicial or
administrative proceeding or investigation commenced by the Commission or to which the Commission is a



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party, Defendant (i) agrees to make available its employees and agents to appear and be
interviewed by Commission staff at such times and places as the staff requests upon reasonable
notice; (ii) will accept service by mail or facsimile transmission of notices or subpoenas issued
by the Commission for documents or testimony at depositions, hearings, or trials, or in
connection with any related investigation by Commission staff; (iii) appoints Defendant’s
undersigned attorney as agent to receive service of such notices and subpoenas; (iv) with respect
to such notices and subpoenas, waives the territorial limits on service contained in Rule 45 of the
Federal Rules of Civil Procedure and any applicable local rules, provided that the party requesting
the testimony reimburses Defendant’s travel, lodging, and subsistence expenses at the then-prevailing
U.S. Government per diem rates; and (v) consents to personal jurisdiction over
Defendant in any United States District Court for purposes of enforcing any such subpoena.



     15. Defendant agrees that the Commission may present the Final Judgment to the
Court for signature and entry without further notice.



     16. Defendant agrees that this Court shall retain jurisdiction over this matter for the
purpose of enforcing the terms of the Final Judgment.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Federal National Mortgage Association
	 
	 	 	 	 	 	 	 	 
	Dated:

	 	     23 May 2006	 	 
	 	By:	 	/s/  Daniel H. Mudd
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Daniel H. Mudd
	 

	 	 	 	 	 	 	 	President and Chief Executive Officer
	 

	 	 	 	 	 	 	 	3900 Wisconsin Avenue, NW
	 

	 	 	 	 	 	 	 	Washington, DC 20016






     On May 23, 2006, Daniel H. Mudd, a person known to me,
personally appeared before me and acknowledged executing the foregoing Consent with full
authority to do so on behalf of Federal National Mortgage Association as its [attorney].






      






/s/    Katherine E. Coles        

Notary Public

Commission expires:  10/14/08









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Approved as to form:



/s/   William R. McLucas                     
      

William R. McLucas

Wilmer Cutler Pickering Hale and Dorr LLP

2445 M Street NW

Washington, DC 20037

202-663-6000

Attorney for Defendant Federal National Mortgage Association





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