GE settles shareholder lawsuit for $40 million

General Electric Co agreed to pay $40 million to settle a shareholder lawsuit accusing the company of misleading investors about its health during the 2008 financial crisis.

Shareholders accused GE of inflating the value of assets at its GE Capital unit, overstating the quality of its holdings in subprime and other risky loans, and maintaining inadequate reserves.

They said this threatened GE's ability to maintain its top credit rating and its quarterly dividend, and caused its stock price to fall once the risks became known.

The settlement requires court approval, and was disclosed in a Monday night filing in Manhattan federal court.

(Reporting by Jonathan Stempel in New York; Editing by Maureen Bavdek)