This is a securities lawsuit filed in the United States District Court for the District of Delaware. The operative complaint in the Action names as defendants Navient, certain officers and/or directors of Navient, and the underwriters on three debt offerings made by Navient in November 2014 and December 2015. The Court appointed the Lord Abbett Funds as Lead Plaintiffs in this lawsuit. You may review a copy of the operative Complaint in the Action by visiting www.NavientSecuritiesLitigation.com.
(a) LEAD PLAINTIFFS’ CLAIMS
Lead Plaintiffs allege that Defendants made numerous false or misleading statements about the business operations and financial results of Navient, one of the country’s largest servicers of student loans, which caused the prices of Navient securities to be artificially inflated and caused damages to investors when they ultimately learned the truth about Defendants’ prior misrepresentations.
Specifically, Lead Plaintiffs allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), claiming that Defendants defrauded investors in Navient securities through their misrepresentations about Navient’s loan portfolio, including for example, by misstating Navient’s loan loss provisions and related metrics, including net income, earnings per share, delinquencies and charge offs, misrepresenting the quality of Navient’s private education loan (“PEL”) portfolio and the adequacy of Navient’s internal controls, as well as making misrepresentations about Navient’s forbearance practices. Lead Plaintiffs further allege that investors learned the truth about Defendants’ misrepresentations through various corrective disclosures, including on July 13, 2015, when Navient revealed that it was “increasing the provision for PEL losses,” on July 22, 2015, when Navient allegedly revealed additional information concerning its PEL portfolio, and on September 29, 2015, when Plaintiffs allege that a report by the U.S. Consumer Financial Protection Bureau exposed the reality that loan servicers like Navient systematically pushed student-borrowers into forbearance.
Lead Plaintiffs also allege violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) arising from alleged misstatements made in the offering documents filed in connection with the public offerings of Navient’s 5.000% Senior Notes and 5.875% Senior Notes due 2024, conducted on or around November 6, 2014, and 5.875% Senior Notes due 2021, conducted on or around March 27, 2015. Specifically, the Securities Act claims concern two categories of misrepresentations: (i) misstatements about Navient’s loan portfolio (as summarized above); and (ii) misrepresentations concerning Navient’s credit facilities. On the latter issue, Lead Plaintiffs allege that Defendants reported Navient’s borrowing capacity under its credit facilities, but misleadingly failed to disclose the likelihood that its access to favorable credit terms would be terminated by an impending Federal Housing Finance Agency rule that blocked noneligible entities from gaining membership with a Federal Home Loan Bank.
Trial in this Action is currently scheduled to begin on January 24, 2022.
(b) DEFENDANTS’ DENIAL OF LIABILITY
Defendants deny Lead Plaintiffs’ allegations in full and deny any wrongdoing or liability for the claims alleged. Among other things, Defendants deny that they made any false or misleading statements violating the federal securities laws, that they knew or believed that their statements were inaccurate, that the prices of Navient’s securities were artificially inflated during the relevant time periods, that the declines in the prices of Navient’s securities during the relevant time periods were caused by the disclosure of any wrongdoing or liability on the part of Defendants, or that any Class Member sustained damages recoverable under the federal securities laws.