Sullivan & Cromwell secures Fourth Circuit win for Syneos in Securities Litigation
Sullivan & Cromwell secures Fourth Circuit win for Syneos in Securities Litigation
The Court held that the defendants’ access to unspecified due diligence information was insufficient
The United States Court of Appeals for the Fourth Circuit has unanimously affirmed the dismissal of a securities class action filed in the Eastern District of North Carolina against Syneos Health and certain current and former members of its board and senior management.
In 2018, the plaintiffs filed a suit claiming that the defendants made false and misleading statements to investors in connection with the 2017 merger between Syneos and inVentiv Health in violation of Section 10(b) and 20(a) of the Exchange Act and Securities and Exchange Commission Rule 10b-5.
Thereafter, the defendants sought to dismiss the complaint in the District Court. In 2020, a Magistrate Judge issued a recommendation denying dismissing the defendant’s motion.
The defendants objected to the decision, after which, in 2021, Judge Louise W. Flanagan rejected the recommendation in its entirety. He dismissed the action with prejudice, agreeing fully with the defendants that the plaintiffs failed to plead a strong inference of scienter or any actionable misstatement.
The Court held that the defendants’ access to unspecified due diligence information was insufficient to plead scienter. The access alleged would not in any event show that the information that the defendants allegedly learned was sufficiently different that its omission misled the investors.
The Fourth Circuit also agreed with the District Court’s ruling that when considering the total mix of information available to a reasonable investor (including extensive and specific cautionary language), the alleged misrepresentations and omissions concerned projections and opinions. These were on the success of the combined company and not materially misleading.
Sullivan & Cromwell team representing Syneos, board members, and senior management included Brian Frawley, Y. Carson Zhou, and Krystal Valentin.
