Freddie Mac’s new chief executive officer is being investigated as to what role he may have played in the company’s accounting problems, the Wall Street Journal reported Friday, citing unnamed sources close to the investigation.
In an article Friday, the Journal said that the Office of Federal Housing Enterprise Oversight (OFHEO) is looking into what role, if any, the recently appointed CEO Greg Parseghian had in Freddie’s errant financial reportings.
The secondary lender announced Parseghian’s appointment amidst a flurry of resignations and firings in early June that were related to the accounting concerns. Freddie has been announcing for some time that earnings statements in past years will be revised and restated, with earnings likely to be higher than the original reports.
According to the WSJ, a Freddie spokesman said that the board specifically questioned an internal investigator about Parseghian’s involvement and that the investigator said Parseghian was not involved. Parseghian “was not responsible for the accounting policy determinations that are the subject of the restatement, financial reporting and disclosures, or the company’s earnings objectives,” the spokesman told the Journal.
The WSJ further stated, quoting “sources familiar with the inquiry,” that the internal investigation would probably reveal that “some company officials designed and conducted large numbers of sophisticated financial transactions with the purpose of shifting hundreds of millions of dollars in earnings into future years.”
The Senate Banking Committee is scheduled to hear testimony about Freddie from OFHEO director Armando Falcon on Thursday, Reuters news service reported.
The Wall Street Journal also reported, citing unnamed sources, that the Securities and Exchange Commission is investigating Freddie’s use of its $246 million in loan loss reserve accounts.
Related stories:
- Big Shakeup at Freddie Freddie Mac fired president David Glenn Monday, amidst a flurry of executive rearrangements.
- Criminal Probe, Class Action on Freddie’s Plate; X-Pres Accused of Ripping Pages From Notes Freddie Mac’s troubles have deepened this week as probing into its accounting and management practices continues.
