General Motors Co. (GM:US) and Chief Executive Officer Mary T. Barra were sued by an investor over delays in addressing ignition-switch defects and other flaws that prompted recalls of more than 3 million vehicles.
“News of the company’s recalls through a series of disclosures, and later reports of government criminal and civil investigations into the company, triggered a sharp decline in the company’s share price, wiping out billions in shareholder value,” investor George Pio said in a complaint filed today in federal court in Detroit.
Pio called GM’s actions “illegal and immoral” and said its failures to disclose and remedy the defects amount to investor fraud. He’s suing the biggest U.S. automaker on behalf of anyone who bought its stock from Nov. 17, 2010, to March 10, 2014, seeking unspecified money damages.
GM fell (GM:US) 1.1 percent to $34.86 at 3:42 p.m. in New York trading. The shares stood at $33 at the start of the class period and closed as high as $41.53 in December.
Barra has said publicly that GM knew as early as 2001 that its ignition switches could slip out of position, cutting off a vehicle’s power while it was in motion. Those failures may have been responsible for 31 accidents and 12 fatalities, according to GM, and have prompted consumer lawsuits against the company in California, Texas and Michigan.
GM this week recalled 1.55 million vans, sedans and sport-utility vehicles, citing concerns over brakes, seat belts and air bags, adding to 1.6 million cars recalled this year because of faulty ignition switches.
On Feb. 13, the automaker said it was recalling 778,562 Chevrolet Cobalt and Pontiac G5 sedans after six deaths were linked to ignition switches that might have caused engines and airbags to turn off.
James Cain, a spokesman for the Detroit-based company, said today the first any GM executive was told of the ignition switch issue was Jan. 31. He declined to comment further on Pio’s allegations.
“Our priority right now is to get these vehicles fixed as quickly as possible,” while minimizing inconvenience to the company’s customers, Cain said in a phone interview.
GM has hired former Chicago U.S. Attorney Anton Valukas, now chairman of Jenner & Block LLC, to lead an internal investigation. The probe is of “critical importance” and Valukas has been told there are “no sacred cows,” Cain said.
Also named as defendants in Pio’s complaint are former company CEO Daniel Akerson, President Daniel Ammann and vice presidents Alan Batey and James DeLuca.
The case is Pio v. General Motors Co., 14-cv-11191, U.S. District Court, Eastern District of Michigan (Detroit).
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