The Securities and Exchange Commission has taken its inquiry into whether Beazer Homes USA has violated federal securities laws to the next level, launching a formal order of private investigation, which gives the SEC the ability to subpoena both documents and testimony.

On Friday (July 20) Beazer received notice of the formal order, Beazer announced in an SEC document filed Monday. "We will continue to cooperate fully with this matter," the company said in the 8-K document.

The initial, less formal inquiry of Beazer by the SEC was announced by the company on May 3. In that stage of the investigation, the SEC gathered information offered voluntarily by sources. If, after that stage is completed, investigators in the SEC's Division of Enforcement feel they need information that has not been forthcoming, they may ask the SEC's five commissioners for the power to subpoena testimony or documents from uncooperative people or entities and the formal order of private investigation is launched.

Beazer's troubles began early this year in the wake of a series of Charlotte Observer stories that focused on the company's high rate of mortgage foreclosures in Charlotte area neighborhoods. The series asserted the foreclosures were sparked by Beazer's aggressive sales tactics and alleged incorrect income numbers were put on loan applications to arrange larger loans than customers could afford.

The series attracted the attention of federal regulators. At the end of March, Beazer said it had received a grand jury subpoena for documents related to its mortgage business from the U.S. Attorney's Office, western district of North Carolina. In April, it hired an independent counsel and an independent financial consultant to investigate internally.

In late April, beneficiaries of the company's 401K plan filed a class action lawsuit alleging the company breached its fiduciary duties by not providing timely, accurate and complete information about its operations. The company has denied any wrongdoing in both cases and has agreed to cooperate fully with any investigation and to defend itself against the allegations.

In late June, Beazer's board of directors fired its chief accounting officer, Michael T. Rand, for attempting to destroy documents. Beazer officials said they found out about Rand during its own internal investigation into the allegations.

Rand was the second senior executive fired this year by Beazer and the third to leave the company. General counsel Kenneth Gary was fired in February for "personal conduct" that violated company policies.