Saturday, 17 January 2015

GM accused of misleading investors over recalls

DETROIT (Bloomberg) -- General Motors Co.
managers misled investors and regulators for
years about issues connected to vehicle ignition
switch defects, shareholders said in a lawsuit
accusing the company of inflating the stock’s
GM CEO Mary Barra assured the U.S. Securities
and Exchange Commission in February that the
company had adequate internal controls over its
finances the day before the first recall was
announced, lawyers for investors said in a
complaint filed late Thursday.
Just weeks after Barra took over, GM recalled
almost 800,000 cars because the ignition switch
could slip out of the “run” position, shutting off
the engine and safety features including airbags
while the car was moving. The recall eventually
expanded to 2.59 million vehicles and has been
linked to at least 45 deaths.
The consolidated complaint filed Thursday in U.S.
district court in Flint, Mich., combines claims by
investors that the automaker’s handling of the
recalls cheated them.
“GM’s internal controls continued to suffer from
severe and systemic problems which resulted in
GM’s failure to accurately account for and
disclose the ignition switch defects and associated
liabilities, costs, and contingencies in its financial
statements,” according to the complaint.
GM spokesman Jim Cain said in March when one
of the shareholder lawsuits was filed that the first
any GM executive was told of the ignition switch
issue was Jan. 31. He declined then to comment
further on the lawsuit allegations.
Unsafe cars
“GM’s long belated recall of these dangerously
unsafe cars has now led to the loss of billions of
dollars of market value for GM investors,” the
lawyers said in the consolidated complaint.
The shareholder lawsuit was filed as a proposed
class action on behalf of all GM investors. U.S.
District Judge Linda Parker appointed the New
York State Teachers’ Retirement system as lead
plaintiff in October.
The lawsuit seeks to represent all investors who
bought or otherwise acquired GM stock from Nov.
Source: Auto News


Post a Comment