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Senators Seek Probe of Student Loan Servicer Stock Trading

Two Democratic Senators called for an investigation into possible insider trading of student loan servicer Navient stock Monday — citing the “unusual timing” of a major purchase of the company’s stock just ahead of a U.S. Department of Education announcement earlier this year that it was terminating its information-sharing agreement with a federal agency that had sued the company.

“The timing and scope of these trades raise serious questions,” states a letter that U.S. Senators Elizabeth Warren, D-Mass., and Suzanne Bonamici, D-Ore., sent Monday to Jay Clayton, chairman of the U.S. Securities and Exchange Commission, or SEC.

102417 Navient“If investors or Department employees were trading based on the unauthorized disclosure or discussion of nonpublic information by Department officials or employees, then it would appear to be a clear violation of securities law,” the letter states.

The letter outlines what the senators believe are a peculiar set of circumstances surrounding the purchase of roughly 872,000 shares of Navient stock at or after 4 p.m. on August 31 — just one day before the Consumer Financial Protection Bureau or CFPB, got a letter from the U.S. Department of Education that indicated the department was ending its information-sharing agreement with the bureau.

“These trades amounted to 24 percent of trading volume that day,” the letter states. “As a result, Navient’s stock increased by more than 4 percent to $13.75 per share from the market close on August 31st.”

The letter notes how Navient’s stock price continued to rise after the House Committee on Education and Workforce publicized the Department’s decision to terminate its information-sharing agreement with the CFPB. It states the stock price rose almost 18 percent between August 31 and September 27.

The letter also cites a news article in which a market analyst responded to the development by upgrading his rating of Navient from “neutral” to “buy” and stated that the termination of the agreement was a “signal that the Trump administration is looking at the industry differently than Obama.”

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