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Synchrony Beats Securities Suit Over Lost Walmart Partnership

April 1, 2020, 7:25 PM

Private label credit card maker Synchrony Financial defeated a securities lawsuit claiming it covered up problems with its underwriting practices that caused it to lose a $9 billion partnership with Walmart Inc., after the District of Connecticut cited a lack of misrepresentations.

The proposed class action, led by institutional investors Stichting Depositary APG Developed Markets Equity Pool and Stichting Depositary APG Fixed Income Credits Pool, accused Synchrony and top executives and board members of misleading investors about the worsening status of its underwriting practices and the deterioration of its decades-long relationship with Walmart, which was once the company’s “most important” client.

Judge Victor A. Bolden dismissed the lawsuit, saying the investors failed to identify material misrepresentations on which a reasonable investor would rely. Many statements challenged by the investors amounted to “optimism or puffery” that wouldn’t sway a reasonable investor given the total mix of information available, Bolden said.

Bolden’s dismissal order, issued Tuesday, doesn’t allow the investors an opportunity to refile.

The investors are represented by Motley Rice LLC and Bernstein, Litowitz, Berger & Grossmann LLP. Synchrony is represented by Pullman & Comley; and Cleary, Gottlieb, Steen & Hamilton LLP.

The case is In re Synchrony Fin. Secs. Litig., 2020 BL 120502, D. Conn., No. 3:18-cv-01818, 3/31/20.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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