On April 24, 2025, the Honorable Jesse M. Furman of the Southern District of New York, approved a $362.5 million settlement in a long-running securities fraud class action case against General Electric (“GE”) and its former Chief Financial Officer, Jeffrey S. Bornstein (together, “Defendants”). Led by Class Representative Swedish pension fund, Sjunde AP-Fonden (“AP7”), along with the Cleveland Teamsters and Bakers Pension Fund, the case arose out of alleged misrepresentations made by Defendants regarding the use of factoring to conceal cash flow problems that existed within GE Power over a three-year period.
To our knowledge, this is the first securities fraud class action premised on violations of Item 303 to survive summary judgment. By way of background, in 2021, the Court sustained Plaintiffs’ claims based on allegations that GE failed to disclose material facts relating its practice of and reliance on factoring, in violation of Item 303, and affirmatively misled investors about the purpose of GE’s factoring practices. Following the completion of extensive fact and expert discovery and the certification of the Class, the Court entered an order denying Defendants’ motion for summary judgment, sending Plaintiffs’ claims to trial.
On the eve of a trial set to begin in November 2024, the parties agreed to resolve the matter for $362.5 million, subject to the Court’s approval.