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SLM Corporation (a/k/a Sallie Mae) Summary: According to a press release dated January 31, 2008, the complaint charges Sallie Mae and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Sallie Mae, through its subsidiaries, provides education finance in the United States.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results and, despite evidence that Sallie Mae’s loan loss provisions for its subprime borrowers attending non-traditional schools were inadequate both prior to and at the start of the Class Period, defendants failed to adequately reserve for losses in Sallie Mae’s non-traditional portfolio. As a result of defendants’ false statements, Sallie Mae’s stock traded at artificially inflated prices during the Class Period, reaching a Class Period high of $57.98 per share in July 2007.
On January 3, 2008, the Company disclosed in an SEC filing that it would be cutting back on its core business of lending to students by being “more selective” in making students loans due to turmoil in the credit markets and a new federal law that slashed subsidies to the private companies that make government-backed student loans. On this news, Salle Mae’s stock dropped $2.49 per share to close at $16.67 per share, a one-day decline of 15%.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company failed to engage in proper due diligence in originating student loans to subprime borrowers, particularly those attending non-traditional institutions; (b) the Company was not adequately reserving for uncollectible loans in its non-traditional portfolio in violation of generally accepted accounting principles, causing its financial results to be materially misstated; (c) the Company had far greater exposure to anticipated losses and defaults related to its non-traditional loan portfolio than it had previously disclosed; and (d) given the deterioration and the increased volatility in the subprime market and reductions in federal subsidies, the Company would be forced to tighten its lending standards on both its federal loans and private education loans which would have a direct material negative impact on its loan originations going forward.
INDUSTRY CLASSIFICATION:
SIC Code: 6141
Sector: Financial
Industry: Consumer Financial Services
| COMPANY/ISSUER NAME: | SLM Corporation |
| COMPANY/ISSUER TICKER: | SLM |
| COMPANY WEBSITE: | http://www.salliemae.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Robert H. Burch, et al. v. SLM Corporation, et al. | |||||||||||||||||
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| DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT | |||
| Class Action Complaint for Violation of the Federal Securities Laws - Demand for Jury Trial | |||
| Type: Complaint | Date on the document: 01/31/2008 | ||
| OTHER DOCUMENTS | |||
| Class Action Complaint for Violation of Federal Securities Laws - Demand for Jury Trial | |||
| Case Name and/or Number: Russell Patrick, et al. v. SLM Corporation, et al. | |||
| Type: Complaint | Date on the document: 03/11/2008 | ||
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