A $300 Million Victory and One of the Largest Secured During the Earliest Stages of a Securities Class ActionIn re General Motors Corp. Securities Litigation
In one of the largest settlements ever secured in the early stages of a securities fraud case, Labaton Sucharow, as co-lead counsel for the plaintiffs, recovered more than $300 million in a lawsuit against General Motors and its external auditor, Deloitte & Touche.
Originally filed in 2005, the lawsuit centered on claims that GM, its officers, and its outside auditor defrauded investors by overstating GM's income and operating cash flow by billions of dollars. The long-running accounting manipulations included failing to properly disclose pension benefits owed to workers at a former division, prematurely recognizing income from supplier rebates, and misstating cash flow.
Recognizing the potency of the plaintiffs' case, the presiding federal Judge directed the parties to mediation. Counsel quickly prevailed, securing a $303 million settlement—GM agreed to pay $277 million and Deloitte, $26 million—which was approved by the Court in January 2009. The substantial settlement is notable. But there's more to this victory lap: GM filed for bankruptcy in June 2009. Had plaintiff's counsel been unable to expeditiously obtain a settlement, meaningful recovery for the shareholders could have been in serious jeopardy. As such, this case highlights the value added by seasoned class counsel that can drive a case to a record finish. It's one thing to secure significant financial recoveries and corporate reform. It's quite another to do it with relative quickness, avoiding the business disruption of protracted, hurly-burly litigation and the very real threat that an entire settlement could be lost.
That's a track record. That's Labaton Sucharow.
Please visit the General Motors Corp. case abstract for more details and case materials.