Rep. Patrick McHenry, a Republican and vice-chairman of House Financial Services Committee, alleged signs of a number of suspicious trading activities when it comes to Navient, the biggest loan servicing company for students The firm was subsequently hit by a federal lawsuit which sent the shares southward. McHenry had hugely criticized the workings of Consumer Finance Protection Bureau (CFPB). Republicans have highly criticized this regulator. McHenry has take special note of the CFPB filed lawsuit against the Navient company. The company is Delaware headquartered and is a well known loan servicing behemoth.
Navient's stock closed at about $16.85 for every share on January 13. When regular trading restarted on January 17, the shares showed $16.58. The stock went south to about $15.85 within initial 24 minutes of the session, and then dropped lower during afternoon. The stock finally closed at about $15.77 per share.
McHenry said that it is unfortunate that the committee staff have learned that there could be improper trading activity in the morning prior to the enforcement action to be taken by CFPB. This particular displeasure was made known after McHenry asked Richard Cordray, the director of the CFPB about the knowledge of any kind of confidential leaks which may result in incidences of insider trading. The former said that it is not clear at this juncture as to if the alleged suspicious trading could include transactions made by staffs working for the CFPB, or by outside traders. The latter could be tipped off by a breach about the coming Navient lawsuit.
There is an alternative explanation for this decline. This could stem from a separate action undertaken by an analyst working at JPMorgan Chase. The company has downgraded its Navient stock to neutral from overweight. This may push a few investors to sell their holdings. Shares of Navient dipped further as the legal action undertaken by CFPB accused the company of providing incorrect information relating to payments and processing them incorrectly. It also accused that Navient failed to act on borrowers' complaints. The stock made a little recovery and subsequently closed in January 18 at about $16.05 per share.
All of CFPB's allegations were denied by Navient. The company filed a motion during the last week of March to dismiss this lawsuit. Washington Republicans have been critical of the CFPB, alleging that the operating structure of the organization cannot be constitutional.