Lawmakers Seek Probe of Sallie Mae Stock Sale

WASHINGTON – Democratic leaders in the House and Senate called for an investigation into the sale of 400,000 shares of student loan giant Sallie Mae by its chairman Albert Lord just days before proposed cuts in federal subsidies pushed the share price down by 9%. Lord sold the shares on Feb. 1 and Feb. 2, for an average of $45.75 each, just four and three days before the President’s budget detailing the proposed cuts was made public, shaving almost $4 off the company’s share price. The difference in the share price saved Lord about $1.5 million on the shares. Rep. Barney Frank, chairman of the House Financial Services Committee, and Rep. George Miller, head of the Education Committee, asked both Sallie Mae and the White House for information about any contacts between the two parties preceding the Feb. 5 release of the President’s budget, which proposed $9 billion of cuts in educational loan subsidies. Sen. Ted Kennedy, chairman of the Senate Education Committee, called on the SEC to investigate the sales for possible insider trading. News of the proposal caused a major sell-off in shares of Sallie Mae, the nation’s largest student lender, with the stock price declining all the way to $42 as a result. A Salle Mae spokesman called the timing of Lord’s trade “utterly coincidental” and said that Lord had notified the company of plans to sell the 400,000 shares two weeks before the sales.