Shuman, Glenn & Stecker Investigates Synchrony Financial

Rhea-AI Summary

Shuman, Glenn & Stecker is investigating potential claims against officers and directors of Synchrony Financial (NYSE: SYF). The investigation is linked to a securities class action alleging that Synchrony misrepresented its underwriting practices, claiming they led to a superior loan portfolio. Contrary to these claims, the company reportedly relaxed its standards to boost growth, resulting in disappointing earnings disclosed on April 28, 2017, which led to a significant 16% drop in share price. Subsequent developments include strained relationships with retail partners, notably Walmart, due to underwriting practices.

Positive

• None.

Negative

• Allegations of misrepresentation regarding underwriting practices leading to a poor quality loan portfolio.
• Significant drops in share price following disappointing earnings and news related to partnership with Walmart.
• Legal proceedings due to improper underwriting allegations from Walmart, leading to further share declines.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210225006052/en/

FAQ

What is the recent investigation involving Synchrony Financial (SYF)?

Shuman, Glenn & Stecker is investigating potential claims against Synchrony Financial's officers and directors related to a securities class action.

What allegations are being made against Synchrony Financial (SYF)?

Synchrony is accused of misrepresenting its underwriting practices, claiming they maintained a high-quality loan portfolio while actually relaxing standards.

What impact did the allegations have on Synchrony Financial's stock price?

Synchrony's stock price fell by 16% following disappointing earnings released on April 28, 2017, and further declines occurred due to issues with Walmart.

What is the current status of the securities class action against Synchrony Financial (SYF)?

The U.S. Court of Appeals for the Second Circuit reversed a previous dismissal of the securities class action, allowing it to proceed to trial.

How did Walmart's decision affect Synchrony Financial (SYF)?

Walmart's choice to partner with a competitor and subsequent lawsuit against Synchrony for improper underwriting led to significant drops in Synchrony's stock price.