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Administration February 7, 2012
Okla. Firefighters Pension Fund Sues over Student Loan Corp. Losses
February 7, 2012 (PLANSPONSOR.com) – The Oklahoma Firefighters Pension & Retirement System sued Citigroup, Discover Financial Services and Student Loan Corp. over claims that Student Loan Corp. misled investors about increased losses beginning in 2008.
Reported by Tara Cantore
According to Bloomberg, the Oklahoma City-based system is suing the companies for $1.7 billion. The suit, which was filed in the U.S. District Court for the Southern District of New York on February 3, claims the system lost money when the company’s stock price dropped after information about the losses became public.
Student Loan Corp was formerly a unit of Citigroup, and was sold to Discover in September 2010. The Oklahoma Firefighters Pension & Retirement System is looking to represent all Student Loan Corp. investors from January 15, 2008, to September 23, 2010.
In the complaint, the pension fund said: “At the same time, (Student Loan Corp.) was failing to properly account for its mounting risks and losses, defendants issued materially false and misleading statements regarding the company’s business and financial results, by telling the investing public that it was well-positioned and performing well despite adverse market conditions,” according to Bloomberg.
In September 2010, Student Loan Corp. told the Securities and Exchange Commission (SEC) in a public filing that it was taking a $900 million charge, just a few days after it announced it was being sold. The lender became a wholly owned subsidiary of Discover on December 31, 2010, stated the complaint.
In an e-mail to Bloomberg, Shannon Bell, a spokeswoman for Citigroup said: “The suit is baseless, and we will seek its prompt dismissal.”