Larry Culp, CEO, Basic Electrical
Scott Mlyn | CNBC
GE’s CEO stated the accusations of fraud by Madoff whistleblower Harry Markopolos are false, and pushed by market manipulation.
“GE will all the time take any allegation of economic misconduct critically. However that is market manipulation – pure and easy,” Lawrence Culp, chairman and CEO of GE stated in a press release. “Mr. Markopolos’s report incorporates false statements of truth and these claims may have been corrected if he had checked them with GE earlier than publishing the report.”
Culp stated the truth that Markopolos by no means talked to firm officers earlier than publishing the report “goes to indicate that he’s not all for correct monetary evaluation, however solely in producing downward volatility in GE inventory in order that he and his undisclosed hedge fund companion can personally revenue.”
Markopolos on Thursday focused GE in a 175-page report, accusing the conglomerate of issuing fraudulent monetary statements to cover the extent of its accounting issues.
A U.S. hedge fund, that Markopolos would not identify, paid Markopolos to analysis and publish his report, and Markopolos instructed CNBC that he was getting a “respectable share” of income that the hedge fund would make from betting in opposition to GE.
The report enumerates a litany of accounting irregularities that he says add as much as a $38 billion fraud, equal to greater than 40% of GE’s market capitalization. A lot of the report focuses on GE’s enterprise of reinsuring long-term care insurance coverage suppliers.
“It should make this firm in all probability file for chapter,” Markopolos instructed CNBC’s “Squawk on the Road. ” “WorldCom and Enron lasted about 4 months. … We’ll see how GE does.”
GE inventory, which has lengthy been beneath stress, fell 13% following Markopolis’ report, marking its largest one-day share loss for the reason that October 1987 inventory market crash.
Markopolios’ report famous that GE has lengthy historical past of accounting fraud, relationship again to as early as 1995, when it was run by Jack Welch.
He known as the alleged insurance coverage fraud “larger than Enron and WorldCom mixed.”
—This can be a growing story. Test again for updates.