Wall Street

The expert who drowned Enron digs under General Electric

Summary

The expert who drowned Enron digs under General Electric Accounting specialist who discovered problems related to investment fraud Bernie Madoff accused the industry group of inaccurate and fraudulent financial statements to regulators. The Wall Street Journal cites a research report […]

The expert who drowned Enron digs under General Electric

Accounting specialist who discovered problems related to investment fraud Bernie Madoff accused the industry group of inaccurate and fraudulent financial statements to regulators.

The expert who drowned Enron digs under General Electric

The Wall Street Journal cites a research report from accounting expert Harry Markopolos. He and his colleagues found that the insurance business GE will require a $ 18.5 billion increase in reserves. He claims that the conglomerate has masked the depth of its problems by filing inaccurate and fraudulent financial statements with regulators. Overall, accounting problems, including in GE’s oil and gas business, amount to $ 38 billion, or 40% of the conglomerate’s market value. The report, which is over 170 pages long, is a mixture of detailed financial analysis and high-profile statements.

The story, however, notes that Markopolos is running an undisclosed hedge fund and that the fund has a permanent short position in GE shares, which means they are betting against them in the short and long term..

«We never met, spoke or communicated with this person in any way. While we cannot comment on the detailed content of the report, which we have not seen, the allegations we have learned about are completely false and misleading.», – said in a released statement from GE.

«It is widely known, and the WSJ has previously reported that it works for and rewards unnamed hedge funds, the statement said. – These funds usually have a financial incentive to try to short-sell a company’s stock to create unnecessary volatility».

«GE maintains its financial performance. We operate to the highest level of accuracy in our financial statements and we have clearly stated our financial obligations in great detail», – a spokeswoman for GE said ahead of the release of the reports.

GE Shares Fall 5.9% On Thursday Premarket.