Sallie Mae 2010 Annual Report Download - page 20

continued litigation. If the settlement receives final approval from the Court, settlement awards will be made to
eligible class members on a claims-made basis from a settlement fund of $19.5 million, and class members may
opt out of certain calls to their cellular telephones. On January 21, 2011, and February 7, 2011, the Company
filed submissions with the Court to advise that approximately 1.76 million individuals had been omitted from the
original notice list for a total of approximately 6.6 million class members. In response, Class Counsel asked the
Company to contribute additional unspecified amounts to the settlement fund. On February 10, 2011, the Court
granted a Consented Motion to Stay Implementation of Settlement and Certain Deadlines. The Court ordered
Class Counsel to file a status report on March 18, 2011. On February 10, 2011, Judith Harper filed a Motion to
Intervene as Party Plaintiff, which the Court terminated on February 11, 2011 based upon the Court’s
February 10, 2011 Stay. On February 9, 2011, Ms. Harper filed a similar Class Action Complaint regarding the
TCPA against Arrow Financial Services, LLC, in the U.S. District Court for the Northern District of Illinois (the
“Harper case”). On February 22, 2011, Arrow Financial Services, LLC filed a Motion to Stay Proceedings in the
Harper case. That Motion is pending.
On December 17, 2007, plaintiffs filed a complaint against us in Rodriguez v. SLM Corporation et al., in
the U.S. District Court for the District of Connecticut alleging that we engaged in underwriting practices which,
among other things, resulted in certain applicants for student loans being directed into substandard and expensive
loans on the basis of race. The complaint does not identify the relief plaintiffs seek. The court denied our Motion
for Summary Judgment without prejudice on June 24, 2009. The Court granted Defendants’ partial Motion to
Dismiss the Truth in Lending Act counts on November 10, 2009. The matter is now in the discovery phase.
ED’s Office of the Inspector General (“OIG”) commenced an audit regarding Special Allowance
Payments on September 10, 2007. On August 3, 2009, we received the final audit report of the OIG related to
our billing practices for Special Allowance Payments. Among other things, the OIG recommended that ED
instruct us to return approximately $22 million in alleged special allowance overpayments. We continue to
believe that our practices were consistent with longstanding ED guidance and all applicable rules and
regulations and intend to continue disputing these findings. We provided our response to the Secretary on
October 2, 2009 and we provided additional information to ED in 2010.
The Company and its subsidiaries and affiliates also are subject to various claims, lawsuits and other
actions that arise in the normal course of business. Most of these matters are claims by borrowers disputing
the manner in which their loans have been processed or the accuracy of our reports to credit bureaus. In
addition, our collections subsidiaries are routinely named in individual plaintiff or class action lawsuits in
which the plaintiffs allege that those subsidiaries have violated a federal or state law in the process of
collecting their accounts. We believe that these claims, lawsuits and other actions will not have a material
adverse effect on our business, financial condition or results of operations. Finally, from time to time, the
Company receives information and document requests from state attorneys general and Congressional
committees concerning certain business practices. Our practice has been and continues to be to cooperate with
the state attorneys general and Congressional committees and to be responsive to any such requests.
Item 4. Submission of Matters to a Vote of Security Holders
We did not submit any matters to a vote of security holders during the three months ended December 31,
2010.
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