WASHINGTON, DC (January 22, 2018) — U.S. Market Advisors Law Group PLLC announces that a securities class action has been filed against General Electric Company (NYSE:GE). The class action is on behalf of investors who acquired GE securities between February 26, 2013 and January 12, 2018.
Investors with losses have until March 19, 2018 to ask the Court to be appointed as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class. Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
Allegations Against General Electric
According to the lawsuit, defendants during the Class Period made materially false and/or misleading statements and/or failed to disclose: (1) General Electric was failing to allocate sufficient reserves with respect to premium deficiencies and other risks associated with GE Capital’s legacy reinsurance business; (2) these risks were then accruing billions of dollars in unreported impairment charges for General Electric; (3) consequently, the value of General Electric was overstated during the Class Period and additional undisclosed impairments were necessary; and (4) as a result, General Electric’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
On July 21, 2017, GE’s then-Chief Financial Officer Jeffrey S. Bornstein advised investors, in advance of GE’s annual cash flow test of GE Capital’s run-off insurance business, that “[w]e recently have had adverse claims experience in a portion of our long-term care portfolio and we will assess the adequacy of our premium returns.”
Following this news, GE’s share price fell $0.78, or 2.92%, to close at $25.91 on July 21, 2017.
Three months later, on October 20, 2017, Bornstein again addressed the adequacy of premium returns in GE Capital’s insurance business, advising investors that GE “recently observed elevated claims experience for a portion of the long-term care book at GE Capital’s legacy insurance business” and “began a comprehensive review in the third quarter of premium deficiency assumptions that are used in the annual claim reserve adequacy test.”
Following Bornstein’s statements, GE’s share price fell as much as $1.48, or 6.28%, to a low of $22.10 during intraday trading on October 20, 2017. However, comments by GE Chief Executive Officer John Flannery muted the effect of this partial revelation, as Flannery assured investors that he was concluding an “exhaustive” review of GE’s business and that there were “no sacred cows” at GE.
On Flannery’s comments, GE’s share price rose $0.25, or 1.06%, to close at $23.83 on October 20, 2017.
On January 16, 2018, GE announced that “the comprehensive review and reserve testing for GE Capital’s run-off insurance portfolio, North American Life & Health (NALH), will result in an after-tax GAAP charge of $6.2 billion for the fourth quarter of 2017.” GE further advised investors that “GE Capital expects to make statutory reserve contributions of ~$15 billion over seven years” and will suspend its dividend to GE for the “foreseeable future.”
That same day, on a conference call with investors and analysts, CEO Flannery stated, in part, that “[c]learly, in hindsight, we underappreciated the risk in [GE’s insurance business] book” and that GE was “looking aggressively at the best structure or structures for our portfolio to maximize the potential of our businesses,” which “could result in many, many different permutations, including separately traded assets really in any one of our units, if that’s what made sense.”
On this news, GE’s share price fell $1.43, or 7.62%, over the following two trading sessions, to close at $17.33 on January 17, 2018.
About USMA Law Group
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
David P. Abel