California reaches nearly $6M settlement deal with General Motors
California has reached a nearly $6 million settlement with General Motors in connection with allegations against the vehicle manufacturer of making misleading statements to investors on the costs it would incur due to ignition switch problems.
California Attorney General Xavier Becerra (D) announced the settlement in a press release Friday.
As part of the settlement, GM has agreed to pay $5.75 million for “purported violations on GM’s alleged failure to disclose the need for, and cost of, the Recalls related to ignition switch and airbag defects in public documents,” according to the agreement document.
The state argued that GM concealing these problems and failing to warn investors of upcoming losses, “artificially inflated GM’s stock price, causing the California Public Employees’ Retirement System (CalPERS) to lose millions of dollars,” Becerra’s office stated in its press release.
“General Motors cheated California twice – first by concealing a fatal flaw in its vehicles, then by concealing the facts about the flaw in its financial disclosures, which affected the retirement investments of public servants across California,” Becerra said in a statement.
“This settlement finally holds GM to account,” added Becerra, who has been nominated by President Biden to lead the Department of Health and Human Services.
GM said in its own statement that it was “pleased to have cooperated with the state of California to resolve this matter,” according to Reuters.
The press release stated that in 2014, GM recalled more than nine million vehicles across the country due to “faulty ignition-switch issues that in some cases caused the sudden termination of a vehicle’s electrical systems, including its power steering and power brakes.”
The issues led to an estimated 124 fatalities and 274 injuries. The California attorney general’s offices argued that GM employees were aware of the ignition problems as early as 2005, but did not disclose them to the National Highway and Traffic Safety Administration (NHTSA) until February 2014.
Friday’s settlement follows a 2017 deal in which GM agreed to a $120 million multistate settlement for violations of consumer protection laws. California received $7 million at the time as part of the settlement.
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