On July 24, the United States Court of Appeals for the Fourth Circuit unanimously affirmed the dismissal of a securities class action filed in the Eastern District of North Carolina against S&C clients Syneos Health and certain current and former members of its board and senior management.
Plaintiffs filed this action in January 2018 claiming that defendants made certain material misstatements and omissions 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. Plaintiffs also asserted that proxy materials relating to the merger contained false or misleading statements in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9.
In September 2018, defendants moved to dismiss the complaint in the district court. Nearly two years later, on August 7, 2020, a magistrate judge issued a recommendation that defendants’ motion to dismiss be denied. After defendants objected to that recommended decision, on August 30, 2021, Judge Louise W. Flanagan rejected the recommendation in its entirety and dismissed the action with prejudice agreeing fully with defendants that plaintiffs failed to plead a strong inference of scienter or any actionable misstatement. In a published opinion, the Fourth Circuit affirmed the dismissal in its entirety. The court held that defendants’ access to unspecified due diligence information was insufficient to plead scienter, and the access alleged here would not in any event show that the information defendants allegedly learned was sufficiently different that its omission misled 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 on the success of the combined company and were not materially misleading.
The S&C team representing Syneos and current and former members of the board and senior management includes Brian Frawley, Y. Carson Zhou and Krystal Valentin.
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