U.S. securities regulators have sent a subpoena to newspaper group Hollinger International Inc. amid disclosures of multimillion-dollar payments to departing chief Conrad Black and other top executives, a source familiar with the matter said Wednesday.
The source, who asked not to be identified, declined to comment further on the specifics of the subpoena from the Securities and Exchange Commission, the first formal move taken against the company by regulators.
Black resigned as chief executive of Chicago-based Hollinger International on Monday after the company disclosed that he and other executives collected $32 million in unauthorized or undisclosed payments. The company, publisher of Britain's Daily Telegraph and the Chicago Sun-Times, is exploring a sale.
An SEC official declined to comment. A company spokeswoman also declined to comment.
The subpoena comes amid an ongoing internal probe into the company's executive compensation and other matters by a special committee of independent directors. 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 Black and other executives.
Shareholder activist Herbert Denton, who is advising a group of Hollinger investors, said an SEC probe of the company was warranted.
Involvement by the SEC will help "put spine in the backs of the independent directors, so they can say, 'Look, the SEC is on our case and we've got to pay attention here,' " Denton said.
Some investors have pressed for reforms at the company for months, saying Black -- the controlling shareholder -- runs Hollinger more like a private fiefdom than a public company responsible to shareholders.
A defiant Black told reporters in Toronto on Tuesday that he was not aware of any SEC investigation into the company and that shareholders should "check the facts. There's no fraud."
Hollinger stock fell 45 cents to $15.30 on the New York Stock Exchange. But the shares are up nearly 12% since news of Black's resignation Monday.