The Department of Education may have inadvertently given some individuals a headstart on buying stock of Performant Financial Corp., hours before it was officially announced that the company was one of two winners of a contract to collect on student loans on behalf of the federal government.
When notifying 40 companies were notified via email on Jan. 11 that they were not selected, the email also mentioned the names of the two winning firms. In the 150 minutes following that email and the filing of a court document that publicly announced the two winning firms, trading activity in shares of Performant, which is public, spiked, according to a published report.
While the company’s stock price climbed more than 20% during that time period, more than 175,000 shares would be traded, compared with the 900 that had been traded in the first four hours following the market’s open that day.
It does not appear that the trading was illegal or based on insider information provided by an employee from ether Performant or the Department of Education. When sending the email to the 40 companies letting them know they had not been chosen, the Department of Education did not say that the information about the winning companies was confidential.
Performant’s Chief Executive, Lisa Im, said no employee purchased shares that day.
Compliance attorneys called the process “clumsy and negligent” and questioned why the announcement wasn’t delayed until after the stock markets had closed for the day.
