Sallie Mae slapped with class-action suit
Class Action News
Sallie Mae, which a week ago obtained new financing and ended its court battle over a failed $25 billion buyout of the student lender, is now the subject of a class-action suit.
Law firm Coughlin Stoia Geller Rudman & Robbins LLP said it filed a suit against Reston, Va.-based Sallie Mae in the U.S. District Court for the Southern District of New York on behalf of purchasers of Sallie Mae common stock between Jan. 18, 2007, and Jan. 3, 2008.
The firm said the complaint charges Sallie Mae and certain officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that the defendants issued materially false and misleading statements regarding Sallie Mae's business and financial results.
We believe the complaint is meritless," said Tom Joyce, a spokesman for Sallie Mae, formally known as SLM Corp.Sallie Mae said on Jan. 28 that the lawsuit it filed in October against four proposed acquirers of the company would be dismissed, as would all counterclaims, and the merger agreement was terminated.
In conjunction with that action, Sallie Mae would receive commitments for $31 billion of 364-day financing from a group of banks led by Charlotte, N.C.-based Bank of America Corp. (NYSE: BAC), New York-based JPMorgan Chase & Co.and others.
Last year the investors backed away from the merger, pointing to the credit crunch that has made it more difficult to land money to finance large deals and a new federal law that slashes subsidies to student lenders.
Sallie Mae recently cut 3 percent of its work force and warned that more layoffs are likely to occur as it tries to cut costs.
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