Sallie Mae Averts SEC Sanctions

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Student loan giant Sallie Mae said it fired the chief financial officer of one of its collection subsidiaries, demoted another manager in the unit, and denied bonuses to the subsidiary's top managers for inflating revenue in an effort to reach performance goals for bonuses, in order to resolve an inquiry by the Securities and Exchange Commission.

As a result, the company said the SEC has agreed not to press for any enforcement action.

Sallie Mae, formally known as SLM Corp., said internal investigations discovered that on three occasions in 2003 the senior managers of the unidentified subsidiary intentionally recorded revenue associated with loan payments made or scheduled to be made in the first few days of a month in the prior month.

Sallie Mae said the amounts were immaterial, less than $75,000, but the practices were inconsistent with company policies and violated generally accepted accounting principles (GAAP).

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