$300 Million Securities Fraud Settlement

$300 Million Securities Fraud Settlement

February 20, 2017

New York State Teachers’ Retirement System v. General Motors Co.

On Feb. 13, 2014 General Motors Co. announced a recall of 779,000 cars, including the company’s 2005-07 Chevrolet Cobalt and the 2007 Pontiac G5, because of defects with their ignition switches. Specifically, the defects enabled the ignition switch key to move out of position, causing the car to shut off and critical safety features to become disabled. GM also disclosed that there had been 22 crashes involving its cars where the airbags did not deploy, including five crashes that caused six deaths.

On Feb.25, 2014, GM more than doubled its recall related to the ignition switches, recalling an additional 842,000 cars including Saturn Ion compact cars from 2003-07; Chevy HHR mid-sized vehicles from 2006-07; and Opel GT Roadster from 2007. The two recalls affected more than 1.6 million GM cars worldwide. GM also said that it had under-reported the amount of accidents and fatalities caused by its defective ignition switch when its first announced the recall, and that the problem actually caused 31 accidents, including 13 fatalities.

On March 11, 2014, the U.S. Justice Department, the U.S. Attorney for the Southern District of New York and the U.S. Senate Committee on Commerce, Science and Transportation announced that they were investigating GM’s handling of the ignition switch recall in order to determine whether the company violated criminal or civil laws by failing to notify regulators about the switch failures.

Further, the U.S. House of Representatives Energy and Commerce Committee also asked GM CEO Mary Barra for documents and field reports related to the recall.

The matter settled for $300 million.

Leave a Reply

Your email address will not be published. Required fields are marked *