Stockholders v Synovus Financial Corp.
Stockholders File Lawsuit Against Synovus Financial Corp.
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 Companys 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 others 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.
If you bought Synovus Financial Corp. securities and would like to obtain information about the Synovus Financial Corp. lawsuit, then you are invited to call Kahn Swick Foti, LLC toll free at (866) 467-1400 to speak with an attorney or visit www.ksfcounsel.com.
