Investor Files Subprime Suit Against Sallie Mae
NEW YORK (Reuters) - An investor filed suit against student lender Sallie Mae on Thursday, accusing the company and its executives of misleading investors about its exposure to subprime borrowers.
The suit, filed in U.S. District Court in Manhattan is seeking class action status.
Investor Robert Burch claims in the suit that Sallie Mae, formally known as SLM Corp (SLM.N) did not take proper precautions in its loan loss reserves for the "subprime" loans, often made to students attending non-traditional "for profit" colleges.
The suit also accuses the company and some of its executives of making false and misleading statements regarding Sallie Mae's financial results and violating accounting rules.
The Company had far greater exposure to anticipated losses and defaults related to its non-traditional loan portfolio than it had previously disclosed," the suit claimed.
The executive defendants named in the case were Chief Executive and Chairman Albert Lord, Chief Financial Officer Charles Andrews, and Executive Vice President of Operations Robert Autor.
A Sallie Mae spokesman did not immediately return a call seeking comment.
(Reporting by Emily Chasan; Editing by Andre Grenon)
