GE Shareholder Actions Over Finance Unit Linked Up

GE Shareholder Actions Over Finance Unit Linked Up - 7/30/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

GE Shareholder Actions Over Finance Unit Linked Up
Christine Caulfield

Securities Law 360. July 30, 2009
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EXCERPT: A federal judge has ordered the consolidation of seven securities class actions against General Electric Co. that allege the multinational conglomerate misled investors about the health of its financial services subsidiary and its ability to continue paying substantial stock dividends. In his order Wednesday, Judge Denny Chin of the U.S. District Court for the Southern District of New York also appointed the State Universities Retirement System of Illinois, to serve as lead plaintiff in the shareholder litigation. The case centers on allegations that GE, beginning in September 2008, misrepresented the true credit quality of GE Capital by hiding billions of troubled assets on its books while publicly projecting earnings of $5 billion for the finance unit in 2009. GE and several executive defendants, including CEO and chairman Jeffrey Immelt, also allegedly gave investors false assurances that the company could maintain its century-old tradition of paying generous stock dividends, specifically per-quarter dividends of $0.31 a share. Immelt stated in a Jan. 23 interview on CNBC that GE had made dividend payments for 100 years, that the company had $48 billion in cash, and that its operating model would assure continued dividend payments at the same rate, the shareholders claim. On Feb. 27, one month after those comments from Immelt, GE “shocked the market” by announcing it was cutting the quarterly dividend to $0.10 per share, an announcement that sent the company's stock price plunging from $9.10 to $7.60 per share, the plaintiffs allege. Then, on March 5, GE announced that about 98 percent of GE Capital's assets were carried at historic cost and not marked to market; that announcement sent the share price falling further, the investors say.

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