US securities regulators have sent a subpoena to newspaper group Hollinger International amid disclosures of multi-million-dollar payments to departing chief executive Mr Conrad Black and other top executives.
Hollinger also said Mr Black, who has been criticised by shareholders about his role following the payments, is stepping down immediately - two days earlier than expected - on the advice of his counsel.
Just a day earlier, a defiant Mr Black told reporters in Toronto he was not aware of any Securities and Exchange Commission (SEC) investigation into the company and that shareholders should "check the facts. There's no fraud."
Hollinger and its audit committee received subpoenas from the SEC "requesting certain documents," the company said. Hollinger also said it has been informed that KPMG, its auditors, have also received a subpoena.
Mr Black resigned as chief executive of Hollinger International on Monday after the company disclosed that he and other executives collected $32 million in unauthorised or undisclosed payments. The company, publisher of Britain's Daily Telegraph, the Chicago Sun-Timesand the Jerusalem Post, is exploring a possible sale.
Shareholders had pressed for the special review amid an outcry over large payouts for management services the company paid to a private firm controlled by Mr Black and other executives. Hollinger said in a statement that the audit committee has also grounded two aircraft used by the company.
Hollinger International is controlled by Mr Black through Toronto-based holding company Hollinger Inc., which exercises control through multiple voting shares despite holding a minority of its equity.
The Chicago Tribunealso reported that a separate SEC investigation is expected to focus on Hollinger's board, which has come under fire for allegations of lax oversight of deals that personally benefited top executives.
Board members include former US Secretary of State Mr Henry Kissinger and former Assistant Defense Secretary Mr Richard Perle.