NEW YORK: A federal judge in Manhattan on Thursday partially dismissed a lawsuit by investors in General Electric Co that accused the company of concealing US$24 billion in insurance liabilities and using fraudulent accounting to prop up its power business.
Judge Jesse Furman, however, granted the shareholders permission to amend their complaint. The class-action lawsuit, originally filed in November 2017, consolidates six cases that sought to hold GE and its senior leaders accountable for falling profits in recent years.
The suit, brought by more than a dozen U.S. and foreign pension plans, retirement funds and investors in GE, names the company and former Chief Executive Officers Jeff Immelt, John Flannery and other senior executives. It alleges they understated GE's exposure to long-term care insurance risks and risks related to its long-term service agreements with customers that bought power plant equipment from GE.
"Plaintiffs may be able to allege additional facts regarding the individual defendants' knowledge, or conscious disregard of, GE's actuarial issues (with respect to its LTC portfolio) and the trends and risks it should have disclosed (with respect to its LTSAs) that would permit plaintiffs to clear the scienter bar," Furman wrote in his ruling, referring to the legal term for knowledge of wrongdoing.
(Reporting by Alwyn Scott, Editing by Rosalba O'Brien and Dan Grebler)