GE won a partial dismissal of a a lawsuit filed by investors that claimed the company understated some of the risks associated with GE’s power business.
A federal judge in New York City said the suit cannot go forward. It claimed GE hid $24 billion in insurance liabilities, and as a result, GE stock dropped without their knowledge. The judge did say the investors could change their complaint and re-file it in the future.
A GE spokesman did e-mail a response to the decision to dismiss the lawsuit, saying, “We are pleased the court dismissed the vast majority of the claims against GE, including the securities fraud allegations related to the company’s legacy insurance business. We intend to vigorously defend the rest of the case and continue to believe the claims are without merit.”
The investor’s lawsuit does not name current GE CEO Larry Culp, but does name former Chief Executive Officers Jeff Immelt and John Flannery. It alleges that back in 2013, This ruthey did not completely acknowledge potential risks in GE’s long-term service agreements with customers that bought power plant equipment from GE.
The decision to dismiss this lawsuit comes just days after tED magazine reported whistleblower Harry Markopolos’ 178-page claim that GE’s insurance business was under-funded, and describing it as a scandal larger than Enron.