GE Responds To Madoff Whistleblower Harry Markopolos: Allegations Are 'Entirely False And Misleading'
General Electric Company (NYSE: GE) called a report published by Bernie Madoff whistleblower about allegations of financial struggles "entirely false and misleading."
Harry Markopolos, a financial fraud investigator and forensic accountant best known for presenting evidence Madoff was engaged in a ponzi scheme, published a new report blasting GE. The 170 page report was reviewed by Wall Street Journal and argues the company is short on working capital.
Markopolos explained some of his key findings in an interview with WSJ.
He said GE's insurance unit needs to increase its reserves by $18.5 billion in cash while the oil and gas unit is engaged in faulty accounting. He also said the accounting problems total $38 billion which represents 40% of the stock's market value.
In a statement to WSJ, GE said it stands behind its financial numbers and operates with the "highest level of integrity" in its financial reporting. The company also said it can't comment on any specific allegations of wrongdoing since it hasn't seen the report but all public allegations are simply not true.
Why It's Important
Markopolos does have a financial interest in the report as he told WSJ he and his co-workers are cooperating with an unnamed hedge fund which has a short position in GE. He also said his research will be presented to relevant regulatory bodies to collect a cash reward connected with whistleblower programs.
GE added in its statement it will not be "distracted by this type of meritless, misguided and self-serving speculation" and the same should apply to the investment community.
GE's stock traded lower by 4.7% to $8.60 at time of publication.
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