Mortgage giant Freddie Mac announced Monday that it is shutting down some operations of its debt-securities sales division and transferring others — moves that experts said should tighten the company's internal controls after an accounting scandal.

The division, the Securities Sales and Trading Group, was responsible for some of the accounting irregularities that the government-sponsored company was cited for last year. Freddie Mac restated $4.5 billion in earnings last year, ousted top executives and was fined a record $125 million in a settlement with federal regulators.

The market-making operations of the division will be closed, and other operations involving mortgages and investments will be moved to different units of the $40 billion-a-year company, McLean, Va.-based Freddie Mac said in a news release.

That will put important market activities of the company under more direct control of senior management, according to UBS analysts Eric Wasserstrom and Bose George.

"We believe this reflects (a) push to improve internal controls," they said in a research note. They described the move as "another step in the organizational change which (Freddie Mac) has implemented in order to improve its accounting and internal controls."

Freddie Mac and Fannie Mae, the other huge government-sponsored mortgage financer, pump money into the home mortgage market by buying and guaranteeing repayment of billions of dollars of home loans each year from banks and other lenders, then bundling them into securities that are resold on Wall Street. The two companies together stand behind some $4 trillion of home mortgages — more than three-fourths of the single-family mortgages in the country.

Last week, Fannie Mae agreed to revamp its accounting, tighten its internal controls and boost its cushion of reserve capital after federal regulators accused it of pervasive earnings manipulation to meet Wall Street expectations. As occurred with Freddie Mac, the Justice Department and the Securities and Exchange Commission are investigating Fannie Mae's accounting.

In a report released Monday, economists at the Federal Reserve Bank of Atlanta urged the regulators to impose still higher capital-holding requirements on Fannie Mae and Freddie Mac.

Freddie Mac, in its news release Monday, also said it was canceling its contracts with eight outside investment advisory firms.

Freddie Mac chairman and CEO Dick Syron said the efforts should simplify its operations.

"Today's actions demonstrate our intention to focus and streamline our business operations so that we execute our mission in the most efficient and effective way possible," he said in the release.

Shares of Freddie Mac rose 8 cents to close at $67.30 Monday on the New York Stock Exchange

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