According to a press release dated July 7, 2009, the complaint charges Synovus and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Synovus is a diversified financial services company and a registered bank holding company.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results and engaged in improper behavior which harmed Synovus’ investors by failing to disclose the extent of its large exposure to the Sea Island Company (Sea Island), a resort in Georgia, and the deteriorating condition of Sea Island. The Company also failed to adequately and timely record losses for its impaired loans, causing its financial results to be materially false. As a result of defendants’ false statements, Synovus stock traded at artificially inflated prices during the Class Period, reaching a high of $13.49 per share on February 1, 2008.
Then, on January 22, 2009, Synovus reported a net loss for the fourth quarter of 2008 of $637 million, or $1.93 per share. The fourth quarter 2008 results included provision expense of $364 million and a $443 million non-cash goodwill impairment charge. On this news, Synovus stock fell to as low as $4.52 before it closed at $4.75 per share on January 22, 2009.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) defendants’ assets contained hundreds of millions of dollars worth of impaired and risky securities, many of which were backed by real estate that was rapidly dropping in value for which Synovus had failed to record adequate loan loss reserves; (b) prior to and during the Class Period, Synovus had been extremely aggressive in granting credit, including to Sea Island, where top officers of each company sat on each other’s boards and whose enormous development projects were highly risky and would be enormously problematic if the value of residential real estate did not continue to increase and if the tourism market slowed, which was then already happening; (c) Synovus’ largest customer, Sea Island, was performing extremely poorly; (d) defendants failed to properly account for Synovus’ real estate loans, failing to reflect impairment in the loans; (e) Synovus’ balance sheet included hundreds of millions of dollars in impaired goodwill which had not been recorded as losses on a timely basis; (f) Synovus had not adequately reserved for loan losses and goodwill impairment such that its financial statements were presented in violation of Generally Accepted Accounting Principles; and (g) Synovus was not on track to report the earnings being forecast for it by analysts covering the Company and relying on Company statements.
According to the Order dated February 2, 2010, the Canadian Labourers and Sheet Metal are appointed Co-Lead Plaintiffs. Coughlin Stoia and Motley Rice are appointed Co-Lead Counsel. The Law Offices of David A. Bain LLC, is Liaison Counsel. In the Derivative Action, Charles K. Miller is appointed as Lead Plaintiff and The Weiser Law Firm, P.C. and Holzer, Holzer, & Fistel, P.C. are Lead Counsel. On June 11, 2010, the lead plaintiff filed an Amended Class Action Complaint, and the defendants responded by filing a motion to dismiss on August 13, 2010. On May 19, 2011, the defendants motion to dismiss was denied.
On June 20 and 27, 2011, the plaintiffs filed a Second Amended Complaint. The defendants have responded by filing a motion to dismiss.
On March 22, 2012, the Court issued an order granting in part and denying in part defendants' motion to dismiss. In addition, an individual defendant was dismissed with prejudice.
On September 26, 2012, the Court issued an Order denying Defendants' motion for reconsideration of the above March 22 Order.
On November 14, 2012, the parties entered into a Stipulation of Settlement in the Derivative Action. On February 26, 2013, the Court entered a Final Judgment in the Derivative Action and issued an Order dismissing the case with prejudice.
On April 22, 2013, the Court issued an Order certifying this litigation as a class action.
On March 10, 2014, the parties entered into a Stipulation of Settlement. The Settlement was preliminarily approved by the Court on June 4.
On November 18, 2014, the Court issued a Final Judgment and dismissed this case with prejudice.