Freddie Mac Subpoenaed
Ordered to preserve documents
Freddie Mac (FRE Quote – Cramer on FRE – Stock Picks) said Monday it has received a federal grand jury subpoena related to accounting, disclosure and corporate governance issues, and that the Securities and Exchange Commission is investigating the mortgage-finance company as well.
The subpoena is for documents related to accounting, disclosure and corporate governance from Jan. 1, 2007, onward. Freddie says the SEC directed the company to “preserve documents,” though it did not provide any specifics about the inquiry or what documents the agency is seeking.
Spokeswomen for both U.S. Attorney Michael J. Garcia and the SEC said they have a policy to “neither confirm nor deny the existence” of an inquiry or investigation.
Freddie received the subpoena from the U.S. Attorney’s Office for the Southern District of New York, and a notice from the SEC’s enforcement division, on Friday.
Freddie and sister company, Fannie Mae (FNM Quote – Cramer on FNM – Stock Picks), were rescued by the government with a cash infusion early this month as bad mortgage debt threatened their capital levels and market confidence. CNBC recently reported that Fannie Mae also received a subpoena. There have been calls from lawmakers and outside observers to investigate Freddie’s and Fannie’s business practices as a result of their near-failure, which threatened to further devastate the U.S. housing market.
Freddie’s stock recently rose 23 cents, or 11.5%, to $2.23, in morning trading on Friday.