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Weil Wins Dismissal of ERISA Trust Beneficiary Derivative Action Against GE Alleging Securities Act Violations

On December 24, 2020, Weil won a victory for General Electric Company and three former GE officers in an action in the Supreme Court of New York, New York County alleging that GE violated Sections 11 and 12 of the Securities Act by making false or misleading statements regarding its long-term care and power businesses.

The plaintiffs are participants in the GE Savings and Retirement Plan, a retirement trust established pursuant to the Employee Retirement Income Security Act (ERISA), suing derivatively on behalf of the Retirement Plan. Supreme Court Justice Andrew Borrok dismissed the action in its entirety, holding that the plaintiffs lacked standing to bring the claims because, as beneficiaries of the trust, they were required but had failed to make a demand on the Retirement Plan trustee and had failed to allege facts supporting their claim that a demand was excused. The court held that the beneficiaries on behalf of a trust are subject to the same pleading standards that govern derivative actions brought by stockholders of corporations, and the court held that “there is simply no basis in th[e] record to assume that the Trustee(s) will not meet its fiduciary obligation in evaluating a demand to bring suit.”

The Weil team was led by Securities Litigation partners Stephen Radin, who argued the motion, and Evert Christensen. The team also included associates Nicole Prunetti and Jonathan D’Errico.