May 27, 2007
Insider Trading Investigation of Sallie Mae Chairman
The House Education & Labor Committee released information that representatives from student loan giant Sallie Mae met with the Office of Management & Budget in December 2006, less than two months before President Bush's budget called for a significant cut in support for student loans that caused a significant drop in the company's shares. Three days before the President announced the budget proposal, Sallie Mae's chairman sold 400,000 shares, about 1/3 of his holdings, over a two-day period (Form 4 here). If the sale had taken place after the budget announcement, it would have resulted in about $1.4 million less in proceeds. A Washington Post article (here) notes that a Sallie Mae representative asserted that the transaction was coincidental and there was no prior notice of what the budget proposal entailed; the chairman was not involved in the meeting with OMB. Sallie Mae is being taken private in a $25 billion transaction, and has been subject to heavy criticism from Democrats on Capitol Hill. The Post article notes that the SEC is looking into the trades. (ph)
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Wall Street is broken. Everything that is wrong with the general financial sector has trickled into the student loan market.
Sad that the people running these companies are so blatantly greedy.
WHo is looking out for the student?
Posted by: Making Student Loans Affordable | Sep 21, 2008 1:46:41 PM