On August 30, 2019, Cohen Milstein, on behalf of the Teachers’ Retirement System of Oklahoma and similarly situated purchasers of General Electric (GE) securities, filed a second amended complaint with the United States District Court for the Southern District of New York in a putative securities class action against GE for alleged omissions and misstatements related to two separate, but related frauds, namely its failure to timely impair tens of billions of dollars in goodwill and the quality and performance of its H-class gas turbines.
On April 25, 2019, the Honorable Denise Cote of the United States District Court for the Southern District of New York appointed Cohen Milstein Lead Counsel. Cohen Milstein’s client, Teachers’ Retirement System of Oklahoma, was appointed Lead Plaintiff.
Teachers Retirement System of Oklahoma, as Lead Plaintiff, brings this action on behalf of purchasers of GE securities between December 4, 2017 and December 6, 2018 (the “Class Period”), who relied on GE’s false and misleading statements and omissions regarding two initiatives in the Power segment that were intended to rescue GE’s flailing business and the Company’s financial future: the launch of GE’s flagship H-class gas turbine and the acquisition of French manufacturer Alstom S.A., which closed in November 2015, for which GE recognized over $17 billion in goodwill.
At the end of the Class Period, investors learned that since 2015 GE had concealed a material and systemic oxidation defect in the H-class gas turbine, causing GE to reserve hundreds of millions of dollars in service charges and warranty claims and lose significant market share to its competitors. Investors also learned that GE had been materially inflating goodwill, which was revealed through the abrupt ouster of CEO John Flannery (architect of the Alstom acquisition), the announcement of a $22 billion goodwill impairment including all of the goodwill recognized from the Alstom acquisition, and a simultaneous near-elimination of GE’s historically stable dividend.
In response to this cascade of bad news, GE’s stock price crashed, its credit rating was cut to a level barely above investment grade, and the U.S. Department of Justice instituted criminal and civil investigations.