Fannie, Freddie get federal grand jury subpoenas

NEW YORK Mon Sep 29, 2008 11:40am EDT

The headquarters of mortgage lender Fannie Mae is shown in Washington September 8, 2008. REUTERS/Jason Reed

The headquarters of mortgage lender Fannie Mae is shown in Washington September 8, 2008.

Credit: Reuters/Jason Reed

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NEW YORK (Reuters) - Fannie Mae and Freddie Mac, the U.S. mortgage finance giants that were taken over by the government this month, said on Monday they were subpoenaed for documents as part of a federal grand jury investigation into their accounting.

The U.S. Attorney's office for the Southern District of New York subpoenaed the two on Friday for documents related to accounting, disclosure and corporate governance dating from January 1, 2007 to the present.

The Securities and Exchange Commission is also investigating these matters and directing the companies to preserve the documents, Fannie Mae FNM.P and Freddie Mac FRE.P said.

Both companies said they will cooperate.

Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia in New York, declined to comment, citing the office's policy not to confirm or deny the existence of investigations.

The SEC also had no comment on the Fannie, Freddie investigations.

The FBI said last week it was expanding its probe of possible corporate fraud related to the U.S. mortgage market collapse to include Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc LEHMQ.PK and insurer American International Group (AIG.N).

The allegations would deal with misstatements of assets, FBI Director Robert Mueller told Congress earlier this month.

Financial upheaval tied to the mortgage market meltdown has propelled the government toward a $700 billion financial rescue package.

With the broader stock markets down more than 3 percent, shares of Fannie Mae were up more than 6 percent at $2.11 and Freddie Mac's shares were little changed at around $1.85.

(Reporting by Lynn Adler, additional reporting by Martha Graybow in New York, Rachelle Younglai and James Vicini in Washington)

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