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Allied Capital Subpoenaed

Actions in a battle with short-sellers come under scrutiny.

Allied Capital (ALD) got a subpoena over its use of private investigators in a battle with short-sellers.

The Washington-based business development company said the subpoena came from the U.S. attorney for the District of Columbia. The company said it is cooperating.

Allied said in a press release Tuesday that in responding to the subpoena, it discovered that "an agent of the company obtained what were represented to be telephone records of David Einhorn and which purport to be records of calls from Greenlight Capital during a period of time in 2005."

Einhorn has long been a vocal critic of Allied, accusing the company of accounting fraud. His Greenlight investment vehicle is short the stock, betting it will fall.

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Einhorn sent Allied's board a letter last month demanding the removal of management. The letter cited the recent federal fraud indictment of an officer at the company's Business Loan Express unit as an example of the "dishonest culture perpetuated by current management."

Allied said Tuesday it rejects allegations that management authorized the acquisition of the phone records.

Shares fell 57 cents to $29 early Tuesday.