General Motors is moving towards a $300 million deal that will end a class-action lawsuit that charges the automaker with concealing the deadly ignition-switch defects, which drove down the value of GM stock.
The New York State Teachers’ Retirement System filed papers in the federal court for the Eastern District of Michigan asking for approval of the $300 million deal, which will end a consolidated class action claiming General Motors Co.’s stock price was inflated during a period when the company concealed ignition-switch defects that the plaintiffs say killed more than 124 motorists.
The $108.2 billion pension fund was approved as lead plaintiff in a class-action lawsuit last year in which the plaintiffs claimed GM committed fraud by failing to disclose the scope of the problem of faulty ignition switches. Costs of the ignition switch scandal has now topped more than $5 billion and continue to grow.
The New York State Teachers’ Retirement System pension fund owns about $98 million in GM shares, and it claimed an estimated loss of $6.23 million between Nov. 17, 2010, and March 10, 2014 — the period cited in the suit against GM.
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The original complaint against GM stated the company during the post-bankruptcy IPO “touted the safety, quality and reliability of GM vehicles … despite their knowledge that millions of GM vehicles were plagued with faulty ignition switches.”
Throughout the class period, defendants made allegedly false and/or misleading statements, and failed to disclose materially adverse facts related to the quality and safety of GM vehicles and defects in those vehicles, the lawsuit said.
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In October, GM reached a settlement with the U.S. Attorney in the Southern District of New York. However, no individual employees were charged and the Justice Department agreed to defer prosecution of the company for three years.
If GM adheres to the agreement, which includes independent monitoring of its safety practices, the company can have its record wiped clean. As part of the settlement, GM also agreed to pay a $900 million fine as part of the agreement.
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GM also established a $600 million victims compensation fund aimed a blunting potential lawsuits from victims and their families. The fund paid benefits for more than 400 deaths and injuries combined earlier this year.