DENVER--(BUSINESS WIRE)--Shuman, Glenn & Stecker announces that it is investigating potential claims against certain officers and directors of Synchrony Financial (“Synchrony” or the “Company”) (NYSE: SYF). Synchrony is a consumer financial services company.
The Firm’s investigation relates to allegations raised in a securities class action against Synchrony and certain of its senior officers in the U.S. District Court for the District of Connecticut. The lawsuit alleges that Synchrony falsely represented that its consistent and disciplined underwriting practices led to a higher quality loan portfolio than those of its competitors. In truth, Synchrony relaxed its underwriting standards and increasingly offered private-label credit cards to riskier borrowers to sustain growth. The truth began to be revealed on April 28, 2017, when Synchrony announced disappointing first quarter 2017 earnings, driven by poor loan performance. On this news, Synchrony’s shares declined by $5.25 per share, or nearly 16%.
Following this disclosure, the Company represented that it tightened credit standards, but falsely characterized those underwriting changes as modest. In fact, Synchrony made significant modifications to its underwriting policies, but concealed that these modifications were damaging its relationships with its retail partners, including Walmart Inc. (“Walmart”). On July 26, 2018, news outlets reported that Walmart chose a competitor to replace Synchrony. On this news, Synchrony’s shares declined nearly 14%. Then, on November 1, 2018, Walmart sued Synchrony, accusing Synchrony of improper underwriting in connection with the Walmart/Synchrony credit card program. Synchrony shares fell by over 10% on this development.
On March 31, 2020, the District of Connecticut dismissed the securities class action. On February 16, 2021, however, the U.S. Court of Appeals for the Second Circuit reversed (in part) the dismissal and remanded the securities class action to the District of Connecticut, paving the way for the case to proceed towards trial.
If you currently own Synchrony common stock and are interested in discussing your rights, or have information relating to this investigation, please contact Kip Shuman toll free at (866) 569-4531 or email Mr. Shuman at kip@shumanlawfirm.com.
Shuman, Glenn & Stecker represents investors throughout the nation, concentrating its practice in stockholder litigation.