General Motors had been facing a lawsuit brought by shareholders who had accused the automaker of padding sales around the time of its “New GM” November 2010 initial public offering. Today, however, GM has won dismissal of Scott v. General Motors Co et al in Manhattan court.
Reuters is reporting that U.S. District Judge Laura Taylor Swain said that GM had offered “all of the information necessary” about a rising supply of unsold vehicles so investors could determine whether the automaker was building up excess inventory.
“That GM did not characterize this increase in inventory as ‘channel stuffing’ or accuse itself of ‘building up excess inventory on dealer lots,’ does render the disclosure document actionable,” Swain wrote. “GM need not characterize events in the most negative way possible as long as the particular negative trend is conveyed to investors.”
The lawsuit was spearheaded by the Teamsters Local 710 Pension Fund (out of Illinois), who were among a group of common and preferred stock investors who asserted that GM’s disclosures gave the impression that sales and revenue were rising, not to mention that GM was recovering from its June 2009 bankruptcy and recessionary federal bailout.
The U.S. Treasury Department and investors sold GM common shares at $33 each but by July 2012 the price had fallen to as low as $18.72. The plaintiffs had sought to recoup their losses or ask for their purchases to be refunded.