* GE accused of hiding billions in troubled assets
* About $200 bln market value lost during class period
* GE says settles despite believing case lawsuit lacks merit
* Settlement papers filed Monday night
By Jonathan Stempel
April 30 General Electric Co agreed to
pay $40 million to settle a shareholder lawsuit accusing the
conglomerate of misleading investors about its health and
exposure to risky debt during the 2008 financial crisis.
The lawsuit sought to hold GE, Chief Executive Jeffrey
Immelt and Chief Financial Officer Keith Sherin responsible for
investor losses in a six-month period when GE's stock price fell
as much as 77 percent, wiping out about $200 billion of market
Shareholders led by the State Universities Retirement System
of Illinois accused the world's largest maker of jet engines and
electric turbines of hiding billions of dollars of troubled
subprime and other loans at its GE Capital unit.
They also said the Fairfield, Connecticut-based company
misled them about its ability to generate earnings and pay its
dividend, and failed to make necessary disclosures when
conducting an $12.2 billion stock offering in October 2008.
GE in March 2009 lost its "AAA" credit rating from Standard
& Poor's and cut its dividend 68 percent, its first reduction
since 1938, despite having also received $3 billion from Warren
Buffett's Berkshire Hathaway Inc in late 2008.
The settlement requires approval by U.S. District Judge
Denise Cote, and was disclosed in a Monday night filing in
Manhattan federal court.
GE is one of many companies to face private lawsuits over
crisis-era disclosures. Many such lawsuits get dismissed, but
U.S. District Judge Richard Holwell in January 2012 let parts of
the GE case go forward. Holwell is now in private practice.
Seth Martin, a GE spokesman, said the settlement was "in the
best interests of shareowners as we avoid diverting significant
resources to a lawsuit that we believe is without merit."
In court papers, lawyers at Berman DeValerio who represent
the lead plaintiff called the settlement an "excellent" result,
citing the uncertainty of litigation.
Joseph Tabacco, a Berman DeValerio partner, did not
immediately respond on Tuesday to a request for comment.
The lawsuit seeks class-action status for shareholders who
held GE common stock between Sept. 25, 2008 and March 19, 2009.
GE shares bottomed at $5.87 on March 4, 2009, after
beginning the class period at $25.68, Reuters data show.
The shares traded Tuesday morning down 2 cents at $22.25 on
the New York Stock Exchange.
The case is In re: General Electric Co Securities
Litigation, U.S. District Court, Southern District of New York,