Published: Sat, August 17, 2019
Markets | By Otis Pena

GE has more to lose from whistle-blower

GE has more to lose from whistle-blower

Culp, who took over the troubled conglomerate previous year, bought almost $2 million worth of GE stock, or 252,200 shares, for $7.93 a share, he said in a regulatory filing.

Markopolos said that the company's cash situation was "far worse than disclosed in their 2018" annual report.

"This is a company in dire financial straits", said Markopolos in a WBUR interview.

The report says GE reported earnings when policyholders were young and not filing insurance claims, but then miscalculated how much it would have to spend to issue those benefits.

"Instead of putting in the amount of employees they promised the state, they're putting in only a percentage of those employees", Markopolos said.

Harry Markopolos, who had raised concerns over investment manager Bernie Madoff before his fraud was exposed, said GE will need to increase its insurance reserves immediately by $18.5 billion in cash - plus an additional noncash charge of $10.5 billion when new accounting rules take effect. In a statement to the media, GE emphatically denied ever speaking to or contacting Markopolos. "We remain focused on running our businesses every day, following the strategic path we have laid out", the company said in a statement.

"The 175 page report seems sensationalized and according to press reports the author appears to have a financial interest in a GE stock decline given a partnership with an undisclosed hedge fund", Kaplowitz said in a note Thursday. The report did not name the entity.

"That's not going away.and it's probably going to make this company file for bankruptcy", Markopolos told CNBC.

Crude Oil Prices Sink as Yield Curve Spurs Recession Fears
Brent crude LCOc1 was up 38 cents at $58.61 a barrel at 1136 GMT, after falling 2.1% on Thursday and 3% the previous day. OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) of production since January 1.

Markopolos said he had made a decision to give the hedge fund a first look at his report, in return for compensation, in order to pay himself and his team for their work.

Shares closed up 9.88 percent at $8.79 following Thursday's 11 percent decline, which marked the steepest drop since 2008.

In fact, CEO Larry Culp just bought almost $2 million worth of shares on Thursday.

In the past two years, GE has announced more than $40 billion in asset writedowns and accounting charges.

Independent of Markopolos' report, GE Capital was already facing investigations, including an inquiry by the Securities and Exchange Commission about the previous $15 billion hit.

It says GE's financial statements about its insurance business do not correspond to those of eight insurers that Markopolos says hold about 95% of GE's exposure.

" Besides, followed by the reveal of Markopolos report over fraudulent activities on 127-year-old U.S. utility conglomerate, shares of General Electric Company plummeted 11.30 percent to $8.01 per share on Thursday's (August 15th) market closure after falling as much as 13.34 percent during midday USA trading hours". The truth is that GE is using a set of assumptions, the short report uses another. "The market should ignore it".

Anxious investors jangled phones on Wall Street on Thursday. "Mr. Markopolos's report contains false statements of fact, and these claims could have been corrected if he had checked them with GE before publishing the report". He also alleged that GE isn't properly accounting for its interest in Baker Hughes, an oil-and-gas services company.

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