Sallie Mae 2015 Annual Report Download - page 35

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Item 3. Legal Proceedings
We and our subsidiaries and affiliates are subject to various claims, lawsuits and other actions that arise in the normal
course of business. It is common for the Company, our subsidiaries and affiliates to receive information and document requests
and investigative demands from state attorneys general, legislative committees and administrative agencies. These requests may
be for informational or regulatory purposes and may relate to our business practices, the industries in which we operate, or
other companies with whom we conduct business. Our practice has been and continues to be to cooperate with these bodies and
be responsive to any such requests.
Pursuant to the terms of the Spin-Off and applicable law, Navient assumed responsibility for all liabilities (whether
accrued, contingent or otherwise and whether known or unknown) arising out of or resulting from the conduct of pre-Spin-Off
SLM and its subsidiaries’ businesses prior to the Spin-Off, other than certain specifically identified liabilities relating to the
conduct of our consumer banking business. Nonetheless, given the prior usage of the Sallie Mae and SLM names by entities
now owned by Navient, we and our subsidiaries may from time to time be improperly named as defendants in legal proceedings
where the allegations at issue are the legal responsibility of Navient. Most of these legal proceedings involve matters that arose
in whole or in part in the ordinary course of business of pre-Spin-Off SLM. Likewise, as the period of time since the Spin-Off
increases, so does the likelihood any allegations that may be made may be in part for our own actions in a post-Spin-Off time
period and in part for Navient’s conduct in a pre-Spin-Off time period. We will not be providing information on these
proceedings unless there are material issues of fact or disagreement with Navient as to the bases of the proceedings or
responsibility therefor that we believe could have a material, adverse impact on our business, assets, financial condition,
liquidity or outlook if not resolved in our favor.
Regulatory Update
At the time of this filing, the Bank remains subject to the FDIC Consent Order. On May 13, 2014, the Bank reached
settlements with the FDIC and the DOJ regarding disclosures and assessments of certain late fees, as well as compliance with
the SCRA. Under the FDIC Consent Order, the Bank agreed to pay $3.3 million in fines and oversee the refund of up to $30
million in late fees assessed on loans owned or originated by the Bank since its inception in November 2005.
Under the terms of the Separation and Distribution Agreement, Navient is responsible for funding all liabilities under the
regulatory orders, other than fines directly levied against the Bank in connection with these matters. Under the DOJ Consent
Order, Navient is solely responsible for reimbursing SCRA benefits and related compensation on behalf of both its subsidiary,
Navient Solutions, Inc., and the Bank.
As required by the FDIC Consent Order and the DOJ Consent Order, the Bank has implemented new SCRA policies,
procedures and training, has updated billing statement disclosures, and is taking additional steps to ensure its third-party service
providers are also fully compliant in these regards. The FDIC Consent Order also requires the Bank to have its current
compliance with consumer protection regulations and its compliance management system audited by independent qualified
audit personnel. The Bank is focused on sustaining timely and comprehensive remediation of each item contained in the orders
and on further enhancing its policies and practices to promote responsible financial practices, customer experience and
compliance.
In May 2014, the Bank received a CID from the CFPB as part of the CFPB’s separate investigation relating to customer
complaints, fees and charges assessed in connection with the servicing of student loans and related collection practices of pre-
Spin-Off SLM by entities now subsidiaries of Navient during a time period prior to the Spin-Off. Two state attorney generals
have provided the Bank identical CIDs and others have become involved in the inquiry over time. To the extent requested, we
have been cooperating fully with the CFPB and the attorney generals but are not in a position at this time to predict the duration
or outcome of the investigation. Given the timeframe covered by this demand and the focus on practices and procedures
previously conducted by Navient and its servicing subsidiaries, Navient is leading the response to this investigation and has
accepted responsibility for all costs, expenses, losses or remediation that may arise from this investigation.
Item 4. Mine Safety Disclosures
N/A