GE Sued by Investor for Touting Stock During CrisisPatricia Hurtado
General Electric Co. was sued by an investor claiming its officers and directors made misleading statements to the public while touting the company’s stock during the financial crisis.
The investor, Angelo Castello, said he bought about 15,000 shares of common stock and claimed GE, its chief executive officer, Jeffrey Immelt, and Chief Financial Officer Keith Sherin “repeatedly touted” GE’s AAA rating and falsely portrayed its true financial condition, violating securities laws.
Many of the Castello’s allegations are based on interviews with unidentified former GE employees who are cooperating as confidential witnesses, according to the complaint filed today in federal court in Manhattan. Castello is seeking unspecified compensatory damages as well as attorneys’ fees.
“These are frivolous claims that were completely resolved in a prior settlement,” Seth Martin, a spokesman for GE, said in an e-mailed statement. “We expect them to be swiftly dismissed.”
Joyce Campbell Priveterre, a lawyer for the plaintiff, didn’t return a voice-mail message left at her office seeking comment on the lawsuit.
GE, based in Fairfield, Connecticut, last year paid $40 million to settle similar shareholder claims against the company, Immelt and Sherin in a case led by the State Universities Retirement System of Illinois. U.S. District Court Judge Denise Cote in Manhattan approved the accord.
The investors sued in 2009, claiming the company had overstated the value of holdings in its GE Capital unit, including its subprime loan holdings.
The earlier suit also targeted Goldman Sachs Group Inc. and other banks involved in GE’s October 2008, $12 billion secondary stock offering. The investors claimed GE’s financial position threatened its AAA rating and ability to pay its quarterly dividend.
The case is Castello v. General Electric Co., 14-CV-1870, U.S. District Court, Southern District of New York. The earlier suit is In re General Electric Co. Securities Litigation, 09-01951, U.S. District Court, Southern District of New York (Manhattan).