This settlement is for faulty ignition switches, hiding the issue – and the damage done to investors.
General Motors (GM)’s faulty ignition switches can cause engines to stall and prevent airbags from deploying in crashes; and this issue was concealed from investors. That’s according to the findings of a long investigation into General Motors’ ignition switches. Up to this point, GM paid around $2.6-billion in total penalties and fines. That includes $900 million to settle a U.S. Justice Department criminal investigation. On top of that, GM paid an additional $1 million to resolve a U.S. Securities and Exchange Commission accounting case, not to mention the company’s other recent recalls.
It is stated that General Motors knew back as early as 2004, that the ignition switch posed a safety threat. Rather than initiating a recall, they allegedly swept it under the carpet.
“California Attorney General Xavier Becerra said the largest U.S. automaker concealed problems from investors related to faulty ignition switches linked to 124 deaths and 275 injuries. GM failed to build reserves for losses it knew were coming, Becerra said, which artificially inflated GM’s stock price and caused the California Public Employees’ Retirement System or CalPERS to lose millions of dollars.”
Reuters
Not only is California Public Employees’ Retirement System (CalPERS) one of the largest pension systems in the state, it’s one of the largest in the country. GM will pay a $5.75 million settlement to resolve the allegations, and said in a statement reported by Reuters that they are “pleased to have cooperated with the state of California to resolve this matter.” General Motors did mount a recall that began in February 2014 for 2.6 million vehicles that may have been affected.
In 2020, GM agreed to a $120 million settlement with owners regarding these vehicles, and how they may lose their value.
While it appears that most of the litigation has finished up in California, other cases are still moving forward regarding this issue. Clearly, the General is charging full steam ahead, including into the world of EVs:
