October 23, 2017 / 6:21 PM / 2 years ago

Warren seeks SEC probe of trading in shares of loan servicer Navient

WASHINGTON (Reuters) - Senator Elizabeth Warren wants the U.S. Securities and Exchange Commission to investigate whether someone profited on inside information regarding the student loan servicer Navient Corp (NAVI.O) and its dealings with the federal government.

Senator Elizabeth Warren (D-MA) addresses the audience at the morning plenary session at the Netroots Nation conference for political progressives in Atlanta, Georgia, U.S. August 12, 2017. REUTERS/Christopher Aluka Berry

In a letter sent to the SEC on Monday, Warren requested an insider trading probe of three large trades made in that company’s stock hours before a congressional committee disclosed that a regulator feuding with the company would no longer have access to certain information about it.

Roughly 900,000 shares of the company’s stock were purchased across three trades on Aug. 31, one day before it became public that the U.S. Education Department would no longer share information about the company with the Consumer Financial Protection Bureau, a top regulator that had accused the company of wrongdoing.

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.

Warren requested the probe alongside Representative Suzanne Bonamici, and it comes weeks after a prominent labor union asked for a similar SEC probe.

“The timing and scope of these trades raise serious questions. 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,” wrote the lawmakers.

A spokesman for the SEC declined to comment on the letter.

The Education Department’s decision to halt information sharing was 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 after 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 Cynthia Osterman

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