Navient Corp. Photo Credit: Jonathan Weiss/Shutterstock.com

Navient Corp. is challenging assertions in a securities class action that top executives at the Wilmington-based Sallie Mae spin-off knew the firm was underreporting to investors the number of delinquent accounts in its student loan portfolio.

Attorneys for the company argued in a court filing this week that a class of investors had based their allegations on the accounts of four “low-level collection personnel” with no access to senior management, as Navient wrapped up briefing on its second attempt to escape a securities suit that has followed the firm for more than two years.

The plaintiffs, led by mutual fund manager Lord Abbett Affiliated Fund Inc., are seeking to recover more than $13 million they say the company lost as a result of Navient's ”pervasive and systemic” practice of granting forbearances to struggling student-loan borrowers instead of marking the accounts delinquent or in default.

The latest round of arguments follow U.S. District Judge Gregory M. Sleet of the District of Delaware's decision in September to toss the original complaint for “puzzle pleading” that at times made the February 2016 document ”very difficult” to follow. The dismissal, however, was without prejudice, and Sleet gave the plaintiffs a chance to patch their pleading deficiencies late last year.

But Navient has said many of the issues remain, arguing in court documents that Lord Abbett could point to no confidential witnesses who had direct contact with senior management or any stock sales to suggest a motive for executives to fraudulently prop Navient's securities.

“Such alleged facts are necessary to sustain serious claims of securities fraud—and despite having had 15 months from the filing of the original complaint to investigate their claims, plaintiff's [amended] complaint is devoid of them,” Navient said in January.

Lord Abbett and its Lieff Cabraser Heimann & Bernstein lawyers have blasted Navient's position as a campaign to discredit the witnesses, whose testimony, they said, had been corroborated by multiple government investigations into Navient's conduct.

The dispute over the credibility goes to the central question of whether Navient knowingly concealed risk from its investors.

Lord Abbett said that the firsthand testimony of the witnesses, who are not identified in court filings, had helped to establish that the directive to mark the delinquent accounts as current came from the firm's senior vice president of default prevention, who reported directly to chief operating officer John Kane.

“Given the pervasiveness of improper loan-servicing activities at Navient—supported by the CWs' accounts and the facts recited in the government complaints and the CFPB's September 2015 report—it would be highly implausible to infer that the individual defendants were unaware of them,” Lord Abbett said in response to Navient's motion.

On Monday, however, Navient maintained that Lord Abbett had still not established the essential elements of its claims.

“Plaintiffs' primary claims rely on anecdotes from low-level collections agents and untested allegations from consumer protection complaints filed in other cases—allegations that are insufficient to support their charge that Navient systematically pushed borrowers into forbearance, or their logically deficient theory that Navient's alleged forbearance practices were connected to any stock losses,” the company said.

The case, captioned Lord Abbett Affiliated Fund v. Navient, also names Kane, president and CEO John F. Remondi and executive vice president and CFO Somsak Chivavibul.

It was not yet clear when Sleet would rule on Navient's motion to dismiss.

Navient and the individual defendants are represented by attorneys from Latham & Watkins and Richards, Layton & Finger.