GLOBAL - US car manufacturer General Motors Corp and its auditor Deloitte & Touche have agreed to pay institutional investors, including pension funds, $303m (€202m) as settlement to a securities class action suit.
Co-lead counsel for the plaintiffs Grant & Eisenhofer and Labaton Sucharow have confirmed GM will make a cash payment of $277m while Deloitte will also contribute $26m as settlement against allegations of making false and misleading statements to investors about the financial health of the company going back as far as 2000.
The case is one of the quickest to be completed so far on behalf of institutional investors, according to Eric Belfi, partner at Labaton Sucharow, as it has been pending for two and a half years but can usually take much longer to reach to reach a conclusion.
German asset management giant Deka Investment and Deka International was lead plaintiff in the case heard by Judge Rosen in the United States district court for the Eastern Disctrict of Michigan, but many of the investors are institutional investors, according to Belfi, including European pension funds.
The case is also especially important, suggested Belfi, as US courts have been more proactive in scrutinising cases with high levels of European investors, and subsequently questioning whether the US court should be recognised by other legal systems when reaching class actions settlements.
"It acknowledges the importance of allowing European investors into US courts. There is a substantial European component to this case. The lead plaintiff not only purchased common stock but also purchased a number of debt securities which were only issued in Europe," he added.
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