Manhattan judge dismissed channel stuffing suit against GM

Article by Andrew Christian, on September 8, 2014

United States District Judge Laura Taylor Swain in Manhattan dismissed a shareholder lawsuit against accusing General Motors Co. of padding sales as it got on with its initial public offering in November 2010 by secretly unloading vehicle inventory on dealers.

Swain ruled that GM disclosed in its IPO offering materials "all of the information necessary" about the increasing unsold vehicle supply to allow investors to determine whether the carmaker was "channel stuffing."

She wrote in her ruling that GM’s move not to describe the inventory surge as “channel stuffing” does not make disclosure document actionable. She noted that the carmaker does not to describe events in the “most negative way possible” as long as it has conveyed the particular negative trend.

A group of investors in GM's common and preferred stock – led by Teamsters Local 710 Pension Fund of Mokena, Ill., -- argued that the carmaker’s disclosures made a false impression that sales and revenue were increasing and it was recovering from 2009 bankruptcy and federal bailout.

When GM held its IPO, the US Treasury Department as well as other investors sold their common shares at the event at $33 apiece. However, the value of the shares dropped 43 percent to $18.72 by July 2012, causing losses to the plaintiff investors.

They had sought to either recover their losses or rescind their purchases. A number of GM officials—like former chief executive Daniel Akerson and former Chairman Edward Whitacre – as dismissed as defendants. [source: Reuters.com]

Topics: gm

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Bentley Motors has just released the specs of the new Bentayga Diesel. Obviously, we couldn’t wait to share it here since it’s the first ever diesel model to come out...
by - September 26, 2016
A big chunk of Volvo Cars’ legacy in developing the most durable and capable car is evident in its latest Cross Country collection. Suffice it to say, our planet has...
by - September 21, 2016
Just very recently, we were all delighted to finally see a Bugatti Chiron out in the streets casually hanging around Cannes in France. The said car was purchased by a...
by - September 9, 2016
Earlier this year, Aston Martin wowed the world with a stunning concept car – the Vanquish Zagato. The concept made its first appearance in May during the Concorso d’Eleganza Villa...
by - September 7, 2016
Lamborghini has always been known to be the home to exotic supercars. The Italian automaker’s production facilities have hosted uniquely designed and powerful show-stopping supercars. It all started with the...
by - September 5, 2016