financetom
Business
financetom
/
Business
/
GE reaches $362.5 million shareholder settlement over power unit
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
GE reaches $362.5 million shareholder settlement over power unit
Nov 26, 2024 7:59 AM

NEW YORK (Reuters) - General Electric ( GE ), doing business as GE Aerospace, will pay $362.5 million in cash to resolve a long-running shareholder lawsuit accusing it of hiding risks at its power business, court papers show.

A preliminary settlement of the proposed class action was filed on Monday night in federal court in Manhattan.

It requires approval by U.S. District Judge Jesse Furman, who in September 2023 refused to dismiss the case while warning a trial would be "expensive and risky" for both sides.

Filed in 2017, the lawsuit concerned GE's reliance on factoring, or the sale of future revenue for cash, in connection with long-term service agreements at its GE Power unit.

Shareholders led by two pension funds -- the Cleveland Bakers and Teamsters Pension Fund and Sweden's Sjunde AP-Fonden -- said the power unit grew increasingly reliant on factoring to boost revenue, while sacrificing future cash flows.

They said the unit did not have enough contracts to factor, and GE's stock price fell after the company "blindsided" investors with billions of dollars of unexpected exposure.

The case covered alleged misleading disclosures between February 2016 and January 2018 by GE and former Chief Financial Officer Jeffrey Bornstein. Both denied wrongdoing in agreeing to settle.

Lawyers for the plaintiffs did not immediately respond to requests for comment on Tuesday. GE and defense lawyers did not immediately respond to similar requests. The plaintiffs' lawyers may seek up to 25% of the settlement fund in fees.

In January 2021, Furman dismissed separate fraud claims concerning a GE insurance portfolio, and dismissed former Chief Executive Jeffrey Immelt as a defendant.

A month earlier, GE paid $200 million to settle U.S. Securities and Exchange Commission charges it misled investors about its power and insurance businesses.

GE, based in Evendale, Ohio, set aside funds for Monday's settlement in the third quarter.

It spun off its healthcare business GE Healthcare ( GEHC ) in January 2023 and its renewable energy and power business GE Vernova ( GEV ) in April 2024.

The case is Sjunde AP Fonden et al v General Electric Co ( GE ) et al, U.S. District Court, Southern District of New York, No. 17-08457.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Copyright 2023-2025 - www.financetom.com All Rights Reserved