Navient Subprime Loan Handling and Securities Price Drop Class Action

Navient is best known for its student loans, and, according to the complaint for this class action, its handling of those loans has everything to do with the value of its stock. The complaint claims that the corporation’s statements misled investors into thinking that it exercised care in making loans and advising students as to repayment plans and that when an October 2017 lawsuit alleged otherwise, Navient’s stock abruptly lost 14% of its value.

The class for this action is all persons and entities who acquired publicly-traded securities of Navient, between February 25, 2016 and October 4, 2017, and were damaged upon the revelation of the corrective disclosure.

The complaint reproduces the following statement, which it claims appeared in Navient’s 2015 10-K, 2016 10-K, 2017 Q1 10-Q, and (with two changes) 2017 Q2 10-Q:

Commitment to compliance and customer centricity. Navient fosters a robust compliance culture driven by a “customer first” approach. We invest in rigorous training programs, internal and external auditing, escalated service tracking and analysis, and customer research to enhance our compliance and customer service.

However, the complaint alleges, this statement is false, because the company (1) engaged in deceptive practices to make subprime loans, and (2) it steered student borrowers into forbearance plans that postponed payments and allowed interest to accumulate rather than pointing them to income-driven repayment plans. The complaint alleges that these actions do not serve Navient’s customers (student borrowers) and increase the likelihood that they will default.

According to the complaint, the image Navient painted of itself was shattered by allegations in a lawsuit brought by Pennsylvania Attorney General Josh Shapiro in October 2017 that charged Navient and a subsidiary with unfair and deceptive lending. A portion of that complaint is quoted as saying that “Defendants unfairly and deceptively engaged in a series of acts and practices to facilitate originating these subprime loans to many borrowers who had a high likelihood of defaulting.”

In another such quotation, the Pennsylvania lawsuit claims that “since at least July 2011, despite publicly assuring borrowers that it will help them identify and enroll in an appropriate, affordable repayment plan, Defendants have routinely disregarded that commitment and instead steered borrowers experiencing long-term financial hardship into forbearance.”

On the day that Pennsylvania lawsuit was filed, the complaint for this class action alleges, Navient’s shares fell by 14%, damaging investors.

The complaint therefore claims that Navient’s previous statements, assuring investors that it was taking great care with compliance and customer service, were false, misleading, and violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

Navient Subprime Loan Handling and Securities Price Drop Complaint

October 16, 2017

According to the complaint for this class action, Navient’s statements on its recent 10-K and 10-Q filings misled investors into thinking that it exercised care in making loans and advising students on repayment plans. Thus, the complaint says, when an October 2017 lawsuit alleged that Navient (1) engaged in deceptive practices to make subprime loans, and (2) it steered student borrowers into forbearance plans that postponed payments and allowed interest to accumulate rather than pointing them to income-driven repayment plans, Navient’s stock abruptly lost 14% of its value, damaging shareholders.

navient_securities_complaint.pdf

Case Event History

Navient Subprime Loan Handling and Securities Price Drop Complaint

October 16, 2017

According to the complaint for this class action, Navient’s statements on its recent 10-K and 10-Q filings misled investors into thinking that it exercised care in making loans and advising students on repayment plans. Thus, the complaint says, when an October 2017 lawsuit alleged that Navient (1) engaged in deceptive practices to make subprime loans, and (2) it steered student borrowers into forbearance plans that postponed payments and allowed interest to accumulate rather than pointing them to income-driven repayment plans, Navient’s stock abruptly lost 14% of its value, damaging shareholders.

navient_securities_complaint.pdf
Tags: Providing False or Misleading Information, Securities, Student Loans