On Thursday, a federal judge in Manhattan decided to keep alive a lawsuit against General Electric Co. and its executives that alleges the company misled investors about its financial health during the 2008 economic crisis.
Investors are seeking to hold GE responsible for losses they incurred when the company’s market value fell by more than $150 billion. GE allegedly marketed itself as being a safer option than its rivals in the wake of the recession and withheld information about the company’s failing financial health, including its exposure to subprime loans.
District Judge Richard Holwell declined to throw out this case and is also allowing investors to continue with claims against GE’s CEO Jeffrey Immelt and CFO Keith Sherin that accuse the executives of misleading and having sufficient intent to mislead.
In his decision, Holwell wrote that "Immelt's categorical statements that investors could 'count on' a dividend and that GE was having 'no difficulties' issuing commercial paper are not the sort of cautious statements one would expect of a CEO attempting to come to grips with the effects of the economic crisis on his company."