Updated from 9:19 a.m. EDT

Freddie Mac ( FRE) is reshuffling its executive ranks, and as part of a number of changes at the top, the company terminated President and Chief Operating Officer David Glenn.

In a press release Monday, Freddie Mac said Glenn was ousted because of "serious questions as to the timeliness and completeness of his cooperation and candor" with the legal staff of the board's audit committee, which was retained in January to review the circumstances of the accounting errors identified during the company's recent restatement.

Earlier this year, the company said it would restate its 2000, 2001 and 2002 financial results. In January, Freddie said the restatements would likely increase its reported earnings for those prior periods, and the company reiterated that view today.

But, as indicated previously, Freddie said that "adjustments affecting its income will relate substantially to changes in the timing of income recognition, and, as a result, cumulative increases related to the adjustments will have offsetting effects in future periods."

Freddie has informed its regulator, the Office of Federal Housing Enterprise Oversight, the Securities and Exchange Commission and the New York Stock Exchange about the moves. The company said its board and management are cooperating with regulators and will continue to do so.

Armando Falcon, the director of the OFHEO, said he's sending a team to investigate the issues surrounding the review of the Freddie Mac re-audit. Falcon sent a letter to Freddie, "as a result of management misjudgments that led to a misapplication of GAAP principles and disclosures of employee misconduct, specifically, altering and failing to supply documents relevant to the restatement process," according to a statement on the OFHEO's Web site.

Freddie also said Leland C. Brendsel will retire as chairman and chief executive and resign from the board. Freddie expects Brendsel to continue serving as chair of the Freddie Mac Foundation. Additionally, Vaughn Clarke resigned from his post as executive vice president and chief financial officer.

"During this review, I have become increasingly concerned about evidence that has come to light of weakness in controls and personnel expertise in accounting areas and the disclosure of misconduct on the part of Freddie Mac employees," Falcon's letter read. "The removal of members of the management team only goes a part of the way toward correcting serious problems -- concerns surrounding management practices and controls remain. I believe additional actions must be taken by the board to address these matters."

Freddie Mac's board named Gregory J. Parseghian president and CEO and appointed Paul T. Peterson as chief operating officer. Martin F. Baumann has been named financial chief. The company also said Shaun F. O'Malley will serve as nonexecutive chairman of the board.

Parseghian, 42, has been executive vice president and chief investment officer for Freddie Mac since June 2002. Peterson, 53, was previously an executive vice president responsible for overseeing all single-family division operations. Baumann, 55, was appointed executive vice president-finance in March, and O'Malley, 67, is the retired chairman of Price Waterhouse LLP. O'Malley has served on Freddie Mac's board since 2001, and he chairs the board's committee overseeing the restatement process.

"Job number one is to get our financial statements right," Parseghian said in a statement. "We are committed to providing re-audited financial statements to the market as soon as possible and to taking any and all steps necessary to ensure that our people, processes and controls are of the highest caliber going forward."

Falcon's letter also read that while Freddie Mac's "asset quality, capital positions and other safety and soundness measures remain strong, conduct has occurred that is inconsistent with OFHEO's expectation of prudent management practices." The agency added that it has had talks with members of the board and the new management team and "has their commitment of full cooperation."

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