General Electric (GE), operating as GE Aerospace, has agreed to pay $362.5 million to resolve a shareholder lawsuit alleging the concealment of financial risks at its power business. Filed in 2017, the case centered on GE Power’s reliance on factoring, a method involving the sale of future revenues for immediate cash, which was tied to long-term service agreements. Shareholders, led by the Cleveland Bakers and Teamsters Pension Fund and Sweden’s Sjunde AP-Fonden, claimed this practice boosted short-term revenue while compromising future cash flows. The stock price fell significantly after GE revealed unforeseen liabilities, impacting investor confidence. The settlement requires approval from U.S. District Judge Jesse Furman, who previously declined to dismiss the case, emphasizing the potential costs and uncertainties of a trial.
GE and former Chief Financial Officer Jeffrey Bornstein denied any wrongdoing in agreeing to the settlement. The case, covering alleged misleading disclosures from February 2016 to January 2018, follows earlier legal challenges. In 2021, Judge Furman dismissed separate fraud claims related to a GE insurance portfolio, and in 2020, GE paid $200 million to settle SEC allegations over its power and insurance businesses. GE, headquartered in Evendale, Ohio, has since restructured, spinning off GE Healthcare in 2023 and GE Vernova in 2024.
