The Complaint alleges that at the beginning of the Class Period defendants assured investors that the Company would hit its financial goals for 2008 and, with respect to the Company’s financial services businesses, differentiated itself from other financial service providers, noting it could "withstand a market slowdown in the U.S. and still grow earnings." Indeed, as alleged, at the beginning of the Class Period defendants reaffirmed 2008 guidance of "hitting 10% EPS growth, getting $2.42 a share or greater." The Complaint alleges that these statements to investors were false when made because defendants failed to disclose the following adverse facts, among others, which they knew or recklessly disregarded: (i) that GE’s financial services division was not performing as well as previously stated and that the division’s investments had materially declined in value and would require the Company to record mark-to-market losses and recognize certain asset impairments; (ii) that the Company was depending on the sale of $900 million in real estate assets during the last two weeks of the first quarter of 2008 in order to achieve a gain of approximately $100 million; and (iii) demand for products in the Company’s Consumer and Industrial Division had materially declined.
As alleged in the Complaint, just a few short weeks after the Company’s assurances regarding its earnings guidance, on April 11, 2008, GE shocked the market when it reported materially worse results for the quarter ended March 31, 2008 than it previously promised, substantially lowered 2008 full year EPS guidance and cut its growth estimate for the year from 5-10% to 0-5%. Indeed, as alleged, instead of the $0.50-0.53 EPS the Company had promised for the first quarter, GE reported EPS of $0.44 for the quarter and lowered EPS guidance for 2008 from $2.42 to $2.20-2.30. On this news, it is alleged that on April 11, 2008 the price of GE shares declined $4.70 per share -- a one day decline of almost 13%, on heavy trading volume.
On October 7, 2008, the judge entered an order consolidating related cases. He then appointed lead plaintiffs and approved selection of lead counsel on October 29, 2008. The two pension plans filed their Consolidated Complaint on January 16, 2009. On March 12, 2009, the defendants responded by filing a motion to dismiss the Consolidated Complaint. On July 15, 2010, Judge Stefan R. Underhill signed the Order granting the defendants’ motion to dismiss and the case was closed.
On August 27, 2010, the plaintiffs filed Notice of Appeal. The appeal is currently pending in the Second Circuit Court of Appeals.