Judge dismisses claims against banks in GE lawsuit
NEW YORK |
NEW YORK (Reuters) - A federal judge on Wednesday dismissed claims against Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and 40 other defendants that they helped mislead investors in General Electric Co's $12.2 billion stock offering in 2008.
U.S. District Judge Denise Cote, who took over the case in February, said a January ruling denying the defendants' bid to dismiss claims failed to consider key court rulings and improperly relied on certain statements.
Cote's ruling does not entirely dismiss the class action lawsuit filed by GE investors, keeping intact claims that GE (GE.N) and its chief financial officer, Keith Sherin, made misleading statements about the quality of the company's loan portfolio.
The State Universities Retirement System of Illinois, the lead plaintiff, filed the lawsuit in 2009, saying GE and myriad financial firms were responsible for investor losses during a six-month period when GE's stock price fell to about $10 from about $26.
The plaintiffs alleged that GE withheld information regarding its health and the health of its GE Capital finance arm, including exposures to subprime and other low-quality loans. They also said GE misleadingly touted itself as being safer than rivals, despite the effects of the financial crisis.
Among those dismissed from the lawsuit on Wednesday are Barclays PLC (BARC.L), Citigroup (C.N) and Bank of America Corp (BAC.N).
"The January opinion improperly relied on statements that were not incorporated into the offering documents, and on statements that were modified and superseded by later statements," Cote said.
It also failed to take into account a court ruling that had established rules on whether stated opinions could be grounds for a lawsuit, Cote said.
Attorneys for the dismissed defendants did not respond to requests for comment. Lawyers for the plaintiffs could not immediately be reached.
A GE spokesman did not respond to an email seeking comment.
The case is In re: General Electric Co Securities Litigation, U.S. District Court, Southern District of New York, No. 09-01951.
(Additional reporting by Jonathan Stempel; Editing by Ryan Woo)
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