The Securities and Exchange Commission has started a formal investigation into Freddie Mac ( FRE), giving the agency the power to issue subpoenas for witnesses and documents, particularly from third parties outside the corporation. Shaun O'Malley, Freddie's new chairman, said in a statement that since January the board has ordered full cooperation with the SEC's informal inquiry, and that the company will "continue to cooperate in all respects as the investigation continues." Freddie's board is closely supervising the issues surrounding the company's earnings restatement, the statement said. "Our Audit Committee counsel's active review, as of this date, does not indicate that any employee of Freddie Mac other than
David Glenn has engaged in conduct of the kind we disclosed on Monday," the statement continued. "We can also confirm that the conduct we disclosed on Monday related to Mr. Glenn's diaries and not to the company's accounting records." Earlier this week, Freddie Mac fired Glenn, the company's president and chief operating officer, and said Leland Brendsel, the chairman and chief executive, would retire. Chief Financial Officer Vaughn Clarke resigned. The nation's second-largest buyer of home mortgages said Glenn's firing was prompted by "serious questions" about his cooperation with the company's internal audit review of past earnings, which has been going on since the beginning of the year. The company said Glenn maintained his own personal diary of events at Freddie and may have altered some of those entries. Shares of Freddie Mac were halted for trading at $50.75 on the New York Stock Exchange.