GE 2015 Annual Report Download - page 150

LEGAL PROCEEDINGS
122 GE 2015 FORM 10-K
As previously reported, two cases were pending against WMC in the United States District Court for the Southern District of New York
at September 30, 2015. In the fourth quarter 2015, WMC concluded a settlement of one of these cases, resulting in the dismissal of the
lawsuit with prejudice. This case, which BNY filed in the third quarter 2012, involved claims on approximately $900 million of mortgage
loans and alleged damages in excess of $378 million. In 2014, the parties reached a settlement in principle on the claims arising from a
portion of the loans held in the trust, which became effective on September 16, 2015. On September 18, 2015, the parties reached a
settlement in principle on the remaining claims in the case, and the securitization trustee declared this settlement effective October 20,
2015 and the case was formally dismissed on October 23, 2015. The remaining case was initiated by the Federal Housing Finance
Agency (FHFA) in the fourth quarter 2012. In the second quarter 2013, Deutsche Bank, in its role as securitization trustee, intervened
as a plaintiff and filed a complaint relating to approximately $1,300 million of loans and alleging losses in excess of approximately $100
million. In December 2013, the District Court issued an order denying :0&¶V motion to dismiss but, on its own motion, ordered re-
briefing on several issues raised by :0&¶V motion to dismiss in February 2015. On July 10, 2015, the District Court entered an order
dismissing the lawsuit as time-barred under the applicable statute of limitations. Deutsche Bank filed a notice of appeal from this order
of dismissal on August 13, 2015.
The amounts of the claims at issue in these cases (discussed above) reflect the purchase price or unpaid principal balances of the
mortgage loans at issue at the time of purchase and do not give effect to pay downs, accrued interest or fees, or potential recoveries
based upon the underlying collateral. All of the mortgage loans involved in these lawsuits are included in WM&¶V reported claims at
December 31, 2015. See Note 2 to the consolidated financial statements for additional information.
In December 2015, we learned that, as part of continuing industry-wide investigation of subprime mortgages, the Civil Division of the
U.S. Department of Justice is investigating potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA) by WMC and its affiliates arising out of the origination, purchase or sale of residential mortgage loans between January
1, 2005 and December 31, 2007. The Justice Department subsequently issued subpoenas for documents to WMC and GE Capital in
January 2016. We will cooperate with the Justice 'HSDUWPHQW¶V investigation, which is at an early stage.
In connection with our acquisition of $OVWRP¶V Thermal, Renewables and Grid businesses in November 2015, we are subject to legal
proceedings and legal compliance risks in connection with legacy matters involving those businesses that were previously outside our
control and that we are now independently assessing. As previously reported by Alstom, following a European Union investigation of
alleged anti-competitive practices in the sale of gas-insulated switchgears that began in 2004 and concluded with $OVWRP¶V payment of
a ¼ million fine in 2014, in September 2013 the Israeli Antitrust Authority issued a decision whereby Alstom, Siemens AG and ABB
Ltd. were held liable for an alleged anti-competitive arrangement in the gas-insulated switchgears market in Israel. While there is no fine
in connection with that decision, claimants brought civil actions in 2013 seeking damages of approximately $950 million and $600
million, respectively, related to the alleged conduct underlying the decision that are currently pending before the Central District Court in
Israel. In March 2015, the court consolidated the civil actions into one proceeding as to liability, but no trial date has yet been set.
As previously reported, in 2000, GE and the Environmental Protection Agency (EPA) entered into a consent decree relating to PCB
cleanup of the Housatonic River in Massachusetts. In 2012, the EPA issued a status report describing potential conceptual approaches
to a 10-mile stretch of the river downstream from a previously remediated area. In September 2015, the EPA released an intended final
decision for the so called "Rest of River". This is not the EPA's final decision, rather, the consent decree provides for discussions and a
detailed dispute resolution process between GE and EPA, after which the EPA will issue its final decision. As of December 31, 2015,
and based on its assessment of current facts and circumstances, GE believes that it has recorded adequate reserves to cover future
obligations associated with an expected final remedy.
The company is reporting the following matter in compliance with SEC requirements to disclose environmental proceedings where the
government is a party potentially involving monetary sanctions of $100,000 or greater. As previously reported, in October 2014, the
U.S. federal government informed the company that it was seeking penalties under the Clean Air and Resource and Conservation
Recovery Acts in connection with a facility sold to Momentive Performance Materials, Inc. in 2006. The allegations relate to improper
operation of pollution control monitoring equipment by incinerator operators. The matter was resolved through a consent decree with
the U.S. federal government and the state of New York that was filed December 4, 2015, and pursuant to the agreement GE paid a
penalty of $2.3 million on January 4, 2016.
122 GE 2015 FORM 10-K