In a unanimous ruling, a three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York dismissed the suit filed against New York-based American Express, Chairman and CEO Kenneth Chenault, and Executive VP and Chief Financial Officer Daniel Henry. According to a news report, the appeals court rules the plaintiff in Local No. 38 International Brotherhood of Electric Workers Pension Fund v. American Express Co. did not properly state its claim.
The Cleveland-based union alleged the company and two officials violated the Securities Exchange Act of 1934 by misleading investors about its underwriting guidelines and exposure to delinquent credit card payments in 2007.
“Plaintiff asserts that Cheanult and Henry made false statements denying that American Express had purposefully relaxed its underwriting standards but fails to satisfactorily allege what specific contradictory information Cheanult and Henry possessed or when they possessed it,” the appeals court said in upholding a lower court ruling.
The 2nd Circuit panel also quoted the lower court’s 2010 ruling: “The complaint’s allegations, taken collectively, reveal a company attempting to increase its share of the credit card market during significant financial turmoil.
“That (American Express’) losses were higher than those of its competitors does not alone support the inference that defendants acted with intent or reckless disregard. The more compelling inference is that defendants’ aggressive growth strategy was sideswiped by the collapse of the credit markets,” said the ruling.
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