According to a Securities and Exchange Commission (SEC) filing, General Motors (GM) noted that, on November 21, the automaker announced that State Street Bank and Trust Company, the independent fiduciary of the GM Common Stock Fund in the plans, determined that, due to GM’s recent earnings announcement and related information about GM’s business, it was not appropriate to allow additional investments by participants into the GM Common Stock Fund.
The filing notes that, as independent fiduciary, State Street is specifically authorized pursuant to its agreements with GM and the plan documents to impose restrictions on purchases or exchanges into and out of the GM Common Stock Fund at any time. “Accordingly, the temporary suspension on purchases of the GM Common Stock Fund that began on September 30… continues until further notice.”
GM announced on September 30, 2008 that it had suspended purchases of its common stock by employees in GM’s Savings-Stock Purchase Plan (“S-SPP”) and the Personal Savings Plan (“PSP”). The filing noted that all purchases of common stock under the plans were suspended because the plans had issued all of their registered shares of common stock. “This suspension was the result of recent unexpectedly high demand among the Plans’ participants due to increased employee interest and a lower market price for the Common Stock,” according to the filing, which went on to note that “the demand significantly exceeded the usual volume and exhausted the supply of registered stock more quickly than the administrators of the Plans foresaw.”
The trading blackout was expected to end the week of November 9, 2008 when GM planned to file a registration statement with the SEC registering additional shares for the Plans.
The SEC filing notes that plan participants, other than directors and officers, are not prevented from selling common stock through the plans, or buying or selling common stock outside the plans, during the blackout period, and that, based on the plan provisions, participants may also at any time exchange shares in the common stock fund for other investment options or change their contribution election. The Sarbanes-Oxley Act generally prohibits directors and officers from trading in their company’s stock when most participants in the company’s stock plans are not able to purchase or sell stock.
The contributions of participants currently directed to the GM Common Stock Fund, will be invested in the default fund for the plan in which they participate, unless they provide new instructions. That means that contributions to the S-SPP will be invested in the Pyramis Strategic Balanced Commingled Pool investment option and that contributions to the PSP will be invested in the Pyramis Active Lifecycle Commingled Pool Investment option closest to the year that the participant will attain the age of 65.