Synchrony Financial (SYF) $34M Shareholder Settlement

D. Connecticut

Court

3:18-cv-1818

Case number

19 Jan 2018

Class period Start

12 Jul 2018

Class period End

07 Sept 2023

Claim deadline

Synchrony Financial (SYF) has reached a $34 million settlement in a long-running investor class action over practices said to have led to the end of its relationship with Walmart.

The complaint alleged that during the Class Period, Synchrony made false representations about its underwriting practices, claiming that they were consistently disciplined and led to a higher quality loan portfolio than its competitors. However, in reality, Synchrony had relaxed its underwriting standards and had been offering private-label credit cards to riskier borrowers to sustain growth.

The truth about Synchrony's credit standards was first revealed on April 28, 2017, when the company announced disappointing first-quarter 2017 earnings driven by poor loan performance. This news caused Synchrony's shares to decline by nearly 16%. Despite this, the company represented that it had tightened credit standards, but falsely characterized those underwriting changes as modest. In fact, the company had made significant modifications to its underwriting policies but concealed that these modifications were damaging its relationships with its retail partners, including Walmart. 
On July 26, 2018, news outlets reported that Walmart had chosen a competitor to replace Synchrony, causing Synchrony's shares to decline by nearly 14%. Then, on November 1, 2018, Walmart sued Synchrony, accusing the company of improper underwriting in connection with the Walmart/Synchrony credit card program. This caused Synchrony's shares to decline by over 10%. 
Overall, the lawsuit alleged that Synchrony engaged in improper underwriting practices and made false representations about its loan portfolio quality to investors. The company's actions, according to the complaint, caused its stock price to be artificially inflated and resulted in financial harm to investors who purchased Synchrony's shares during the Class Period.

Case Status

Disbursement

Alleged Offence

Other

Suspected Party

Other

Security Type

Stocks

Trade Direction

Long

Payout per Share

0.23

Filing date

02 November 2018

Plaintiffs

Stichting Depositary APG Developed Markets Equity Pool

Attorneys

Bernstein Litowitz Berger & Grossmann LLP (New York, NY), Motley Rice LLC (Hartford, CT)

Judge

Hon. Victor A. Bolden

Administrator

EPIQ

Court hearing date

31 July 2023

Exclusion deadline

10 July 2023

Objection deadline

10 July 2023

Trades matching type

FIFO

Disbursement date

02 August 2024

+$34,000,000

Cash Settlement Amount