October 23, 2017

Warren, Bonamici Request SEC Investigation into Potential Insider Trading of Navient Stock

Reports Indicate Stock Purchases Immediately Prior to Education Department Announcement Impacting Navient Stock Prices

PDF of the letter

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) and United States Congresswoman Suzanne Bonamici (D-Ore.) today sent a letter to the Chairman of the U.S. Securities and Exchange Commission (SEC), Jay Clayton, urging the agency to open an investigation into potential insider trading of Navient stock.

An unknown investor or group of investors placed three large trades of student-loan servicer Navient's stock at or after the market close on August 31, 2017, the day before the Department of Education (ED) announced it would terminate its information sharing partnership with the Consumer Financial Protection Bureau (CFPB). These trades collectively amounted to 24 percent of Navient stock trading volume that day.

The letter notes the importance of the agreement that was terminated, reporting that in January, "the CFPB sued Navient, alleging that the company, among other practices, systematically railroaded borrowers away from student loan repayment plans that would result in lower payments," and that Navient disclosed in its SEC filings that the CFPB lawsuit's ruling "may have a material adverse impact on the Company."  Warren and Bonamici also referenced a letter the AFL-CIO sent to the SEC that presented the first evidence of potential insider trading of Navient stock.

The letter also explains that, "Given the CFPB's pending investigations into and lawsuit against Navient," ED's announcement to terminate information sharing with the CFPB, "was material, nonpublic information with significant market implications," and that "unlawful disclosure of such information to Navient's investors, or any trading by a government employee based on this nonpublic information, would constitute a clear violation of the Securities Exchange Act of 1934, the Securities Act of 1933, or both, depending on the parties involved."

Warren and Bonamici request in their letter that the SEC investigate who made the large trades before the official release of ED's termination letter, whether those individuals or corporate entities were aware of ED's forthcoming announcement and from whom they received that tip, and who outside ED knew about the announcement prior to it being made public.