[Marxism] The Halls of Nepotism

[Louis Proyect <lnp3@xxxxxxxxx>]

NY Times, April 5, 2007
College Officers Profited by Sale of Lender Stock
By JONATHAN D. GLATER

The directors of financial aid at Columbia 
University, the University of Texas at Austin and 
the University of Southern California held shares 
in a student loan company that each of the 
universities recommends to student borrowers, and 
in at least two cases profited handsomely.

The personal stake of the three university 
officials in the company, now known as Student 
Loan Xpress, is the latest revelation in an 
expanding investigation by Attorney General 
Andrew M. Cuomo of New York into the 
relationships between student loan companies and 
universities. Student Loan Xpress is one of the 
?preferred lenders? recommended at all three universities.

Government filings show that the three officials 
sold shares in a stock offering by the parent 
company of Student Loan Xpress in 2003 and held 
additional stock options in the company, known as 
Education Lending Group. One of the officials 
made more than $100,000, according to documents 
and lawyers in Mr. Cuomo?s office. In one case, 
that of Texas, the official says he was invited to invest in the company.

The documents show the largest gains went to 
David Charlow, executive director of financial 
aid at Columbia University. Columbia said 
yesterday that it had put Mr. Charlow on paid leave ?pending a full review.?

Mr. Charlow sold 7,500 shares for about $10 each 
and held options on 2,500 more shares. Officials 
in the attorney general?s office said he had 
originally bought the shares for about $1 each.

The officials said that Mr. Charlow sold 
additional shares ? perhaps the result of 
exercising the 2,500 options ? in 2005, and that 
he earned a total of more than $100,000 from all 
the sales. Student Loan Xpress was put on 
Columbia?s preferred lending list in 2005.

Mr. Charlow, who the officials said sat on 
Student Loan Xpress?s advisory board, did not return a call.

Officials at the university notified Mr. Cuomo of 
Mr. Charlow?s investments. The attorney general 
has now subpoenaed Columbia for documents 
describing its relations with loan companies.

Mr. Cuomo also sent subpoenas to Student Loan 
Xpress and its current parent company, CIT Group, 
seeking documents and testimony. And he wrote to 
the universities in Texas and California seeking more information.

Student Loan Xpress was acquired by CIT in 2005. 
C. Curtis Ritter, a spokesman for CIT, said the 
transactions at issue ?occurred several years 
prior to CIT?s acquisition of the company.?

?We are currently seeking to determine the facts 
surrounding those transactions,? Mr. Ritter said in an e-mail message.

full: http://www.nytimes.com/2007/04/05/education/05loans.html

===

NY Times, April 5, 2007
Trust Sued Over Backing Retiree Plan
By GRETCHEN MORGENSON

A lawsuit filed in federal court in Manhattan 
last week contends that a retirement plan offered 
by the New York State United Teachers breached 
its fiduciary duty when it accepted millions of 
dollars in payments from an investment firm in 
exchange for endorsing the firm?s products to plan members.

The lawsuit, filed as a class action on behalf of 
participants in the New York State United 
Teachers Member Benefits Trust, taps into a 
growing concern among retirement plan 
participants that excessive fees are enriching 
investment firms while diminishing their savings. 
The suit also signals to those overseeing plans 
that the investment offerings must be appropriate 
and suitable to plan participants.

According to the court filing, the teachers? 
trust exclusively endorsed a high-fee annuity 
investment offered by ING Life Insurance and 
Annuity Company, a subsidiary of the ING Groep, a Dutch investment firm.

In return, ING reimbursed the trust for salaries 
of some employees whose jobs were to promote the 
company?s products to plan members. ?The 
excessive costs of the plan compared to lower 
cost equivalents resulted in tens of millions of 
dollars of lost retirement savings? for the trust?s members, the filing said.

full: http://www.nytimes.com/2007/04/05/business/05erisa.html

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