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General Electric Company

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Case Summary

Company Name
General Electric Company
Stock Symbol
GE
Class Period
December 27, 2017 to October 29, 2018
Motion Deadline
April 2, 2019
Court
Southern District of New York

The complaint charges GE and certain of its current and former officers with violations of the Securities Exchange Act of 1934.  GE is a globally diversified technology and financial services company that offers a wide variety of products and services, including aircraft engines, power generation, water processing and household appliances.  GE’s largest and most important business segment is GE Power.  The majority of GE Power’s revenue comes from the sale and servicing of its Gas Power Systems, including its H-Class gas turbines, which are sold to power utilities across the globe.   In 2017, GE Power was the leading manufacturer of gas turbines, with more than 50% of global market share.

The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding GE’s business, operations and financial condition, including that the structural design of GE Power’s flagship gas turbines was flawed, resulting in an oxidation problem that caused the blades in the H-Class gas turbines to fail, and that GE Power’s goodwill was materially overstated, in large part because of such structural issues, which would result in GE taking a $23 billion goodwill impairment charge related to GE Power.  In addition, defendants failed to disclose that the SEC had expanded its investigation into the Company's accounting practices, including the $23 billion goodwill impairment charge related to GE Power.  The Company announced the goodwill impairment charge on October 1, 2018, and the SEC investigation began shortly thereafter.  As result of this information being withheld from the market, GE securities traded at artificially inflated priced during the Class Period, with the price of GE stock reaching a high of more than $18 per share.

Then on October 30, 2018, GE announced that the SEC had expanded its previous investigation into the Company’s accounting practices to include the $23 billion goodwill impairment charge and that the Department of Justice was also investigating the Company.  GE had failed to disclose this material information on October 12, 2018, when defendants announced that GE was delaying the release of its quarterly earnings.  The Company also disclosed it was slashing its dividend to $0.01 and announced its intentions to reorganize its GE Power segment.  On these disclosures, the price of GE stock fell sharply, from a closing price of $11.16 per share on October 29, 2018, to a closing price of $10.18 per share on October 30, 2018 – a decline of nearly 10% – with GE shares trading to as low as $9.87 per share that day.

Class Period: December 27, 2017 - October 29, 2018
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