WASHINGTON (Reuters) - The AFL-CIO, a federation of labor unions, on Tuesday called on the U.S. Securities and Exchange Commission to investigate a few large trades in the stock of student loan servicer Navient Corp that occurred just before a government announcement favorable to the company was made public.
In the letter sent to the SEC on Tuesday, a copy of which was seen by Reuters, the AFL-CIO urged a probe into the purchase of shares of Navient made in a series of three trades on the last day of August, hours before a congressional committee disclosed that the U.S. Education Department would no longer share information about the company with the Consumer Financial Protection Bureau, a top regulator which had accused the company of wrongdoing.
Heather Slavkin Corzo, director of the labor union’s office of investment, said in the letter that the AFL-CIO did not know who made those trades, a total of nearly 900,000 shares that accounted for 24 percent of trade in Navient’s shares that day.
The SEC and the CFPB both declined to comment.
A spokeswoman for Navient said the company was not aware of the government decision before it was made public, and said Navient welcomed “any investigation into public trading of our stock to ensure markets function properly and that there is no trading impropriety.”
The AFL-CIO said the nearly 900,000 shares were purchased at or after the market close on Aug. 31, in the hours between the CFPB’s being notified of the policy shift and its becoming public. Navient’s stock on Sept. 1, the day the policy change was announced, closed at $13.75 a share, up from its Aug. 31 closing price on the Nasdaq at $13.20.
The AFL-CIO said in the letter that it wants the SEC to find out whether the stock purchases were done illegally, in violation of insider trading laws or the STOCK Act, a 2012 law that makes clear it is illegal for members of Congress or their staff to personally profit on private information obtained in their work.
The Education Department’s decision to halt information sharing is significant because the CFPB had long sparred with Navient, filing a lawsuit against the company in January that accused it of “systematically and illegally failing borrowers at every stage of repayment.”
Navient defended its record at the time, calling the lawsuit “unfounded” and politically motivated.
In an Aug. 31 letter, Education Department officials informed the CFPB’s director, Richard Cordray, that he would be cut off from department information about student loans going forward, saying the CFPB acted “unilaterally” in pursuing action against student loan servicers.
That shift in policy, which would complicate any future efforts by the CFPB to oversee servicers like Navient, was publicly announced on Sept. 1, in a statement from Representative Virginia Foxx, the head of the House of Representatives Education and Workforce Committee.
Reporting by Pete Schroeder; Editing by Leslie Adler