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First Marblehead Gets an 'Invite' From the SEC

The agency wants to chat about gift-giving and the former CEO.

Securities regulators are taking a preliminary look into the gift-giving scandal at

First Marblehead



An official with the educational loan servicing firm confirmed Friday that the

Securities and Exchange Commission

has asked for information about the gift-giving scandal involving First Marblehead's former chief executive and a former top executive at

Bank of America

(BAC) - Get Free Report


First Marblehead General Counsel Peter Tarr says the SEC recently "invited" the Boston-based company to provide details on last week's resignation of Daniel Meyers, the company's former CEO and founder.

Meyers resigned from First Marblehead in conjunction with the firm's disclosure that he had given $32,000 in gifts to Kathy Cannon, who at the time was a senior vice president in BofA's student loan operation. A few weeks before Meyers' resignation, BofA officials asked Cannon to leave the bank for violating its policies on avoiding conflicts of interest.

"Given the media attention, as we expected, we were invited to come to the SEC and give them details about Dan's resignation," says Tarr. "It's a routine matter."

Tarr says the company is in the process of scheduling a meeting with the SEC. Sources say the request for information came from the SEC's Boston regional office.

SEC spokesman John Nester declined to comment on the matter.

A regulatory source says the events surrounding Meyers' resignation are the kind of situation the SEC would be expected to look into.

The gift-giving scandal is playing havoc with First Marblehead's stock. Shares of the firm, which generates fees from servicing student loans and packaging them for resale in asset-backed bonds, have fallen 22% since Meyers' resignation was announced on Sept. 27.

The stock was most recently trading Friday at $21.15, down 66 cents, or 3%.

In other news, First Marblehead announced late Thursday that it had moved up the closing date of its $1.68 billion educational loan securitization to Oct. 12. The closing date had been pushed back to the end of the month after BofA pulled out as a co-manager on the deal, which is being led by Deutsche Bank.

BofA and First Marblehead officials have declined to comment on what prompted the nation's No. 2 bank to back out of the securitization. But some have speculated it was a response to the gift-giving scandal.

Any move by BofA to scale back its relationship with First Marblehead could be significant, given that BofA is First Marblehead's second-biggest loan processing customer. First Marblehead, in its most recent fiscal year, serviced $2.7 billion in educational loans, of which $632 million was underwritten by BofA.