A U.S. judge in Manhattan has dismissed most but not all of a shareholder lawsuit accusing General Electric Co of concealing billions of dollars of insurance liabilities and using questionable accounting to prop up its power business, Reuters reports.
In a Friday night decision, U.S. District Judge Jesse Furman dismissed fraud claims based on GE’s alleged misrepresentations about its long-term care insurance portfolio, and most claims concerning long-term service agreements in its power division.
The judge allowed shareholders to pursue claims that Boston-based GE should have disclosed its reliance on factoring, or the sale of future revenue for cash, and to pursue some claims against a former GE chief financial officer, Jeffrey Bornstein.
Furman’s 34-page decision followed GE’s agreement on Dec. 9 to pay $200 million to settle U.S. Securities and Exchange Commission charges it misled investors about its insurance and power businesses.
The shareholders, including pension funds and other investors, asked Furman to treat the SEC settlement as proof GE had misled them, while the defendants said the judge could infer they had no intent to defraud. Furman rejected both suggestions.
Lawyers for the shareholders did not immediately respond to requests for comment. A GE spokeswoman did not immediately respond to requests for comment on behalf of the defendants, who include former Chief Executive Jeffrey Immelt.
GE is in a multiyear turnaround focused on improving cash flow, cutting costs and shedding some units, while retaining aviation, power generation, renewable energy and other businesses.
