It marks the second settlement to hold GM accountable for its defective ignition switches
Sacramento, Calif.—California Attorney General Xavier Becerra has announced a $5.75 million settlement against General Motors (GM), resolving allegations that GM made false and misleading statements to investors, including the state’s largest pension system, regarding the costs the company would incur due to its ignition switch problems.
For years, GM knew its ignition switch issues were causing crashes and would result in massive recalls, Becerra said in a news release, but GM concealed the problems from investors and failed to build reserves for the losses it knew were coming. Those actions artificially inflated GM’s stock price, causing the California Public Employees’ Retirement System (CalPERS) to lose millions of dollars.
In 2014, GM recalled over nine million vehicles in the U.S. in response 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 defect ultimately led to a reported 124 fatalities and 274 injuries. GM employees knew about the problematic ignition switches in 2005 but didn’t disclose the problems to the National Highway and Traffic Safety Administration (NHTSA) until February 2014.
The settlement marks Becerra’s second settlement to hold GM accountable for its defective ignition switches. In 2017, he announced a $120 million multistate settlement with GM for violations of consumer protection laws, of which California received $7 million.
A copy of the settlement is available here.