California AG Becerra Announces $5.75 Million Settlement with General Motors
SACRAMENTO (CBS SF) -- California Attorney General Xavier Becerra on Friday announced a $5.75 million settlement against General Motors, a payout that resolves allegations that the company made misleading statements to investors -- including the state's largest pension system -- regarding the costs the company would incur due to its ignition switch problems.
According to a release issued by Becerra's office, General Motors knew that ignition switch issues on its vehicles were causing crashes for years and would eventually lead to massive recalls. GM concealed the ignition problems and their fallout from investors and failed to build reserves for the inevitable losses the company would suffer, Becerra's office said.
In 2014, General recalled over nine million vehicles in the U.S. 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 faulty switches ultimately led to a reported 124 fatalities and 274 injuries. GM employees were aware of the problematic ignition switches as early as 2005, but didn't disclose the problems to the National Highway and Traffic Safety Administration (NHTSA) until February 2014.
These actions artificially inflated GM's stock price, causing the California Public Employees' Retirement System (CalPERS) to lose millions of dollars.
"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 the release. "This settlement finally holds GM to account."
The settlement marked Becerra's second settlement holding General Motors accountable for its actions. In 2017, California received $7 million as part of a $120 million multi-state settlement with GM for violations of consumer protection laws.
A copy of the settlement is available online.
