General Motors Corp., Detroit, was sued for issuing misleading financial statements and projections that inflated its stock and debt prices, according to a class action lawsuit filed by Folksam Asset Management in U.S. District Court, New York.
Folksam, one of Sweden's largest asset managers, lost about $1 million in GM securities and other investors lost several billion dollars, said Melvyn I. Weiss, partner, Milberg Weiss Bershad & Schulman, which is representing Folksam. He didn't have more precise figures.
The suit claims that GM stock fell to $28.14 a share on March 16, when GM restated its 2004 results and 2005 financial projections. The stock was $32.71 on the previous day. The stock fell further after March 16, the suit said, adding that GM debt also declined substantially in value.
The suit is seeking to include investors in the class action that bought GM equity or debt securities between Feb. 25, 2002, and March 16, 2005, during which time GM issued $18 billion in debt and preferred securities, the suit states.
The suit also names as defendants General Motors Acceptance Corp.; G. Richard Wagoner Jr., GM chairman and CEO; John M. Devine, vice chairman and CFO; Peter R. Bible, chief accounting officer; and Walter G. Borst, treasurer.
The suit seeks an award of damages investors sustained by the alleged misrepresentation plus interest, although it doesn't specify an amount. It also seeks to have Messrs. Wagoner and Devine pay restitution on the 2004 bonuses and profits the two executives received from sale of GM securities into a trust for investors. The suit notes that in 2004, Mr. Wagoner received a $2.4 million bonus, and Mr. Devine, $1.4 million. It doesn't specify the amount of profits the two received from securities.
Jerry Dubrowski, GM spokesman, said company officials had no comment on the suit.