GE: stock in a spin, with huge fraud suspected
(CercleFinance.com) - The GE share is down over 7% Thursday on the New York Stock Exchange following the publication of a report mentioning widespread accounting fraud within the US industrial group.
According to Harry Markopolos, an independent financial analyst behind the Bernard Madoff investigation launched in the early 2000s, GE would be nothing less than the "next Enron," the Texan energy broker that went spectacularly bankrupt in 2001.
The whistleblower - who says he has examined the accounts of the conglomerate for more than a year - explains that GE has, for several decades, been conducting a financial fraud consisting of only publishing the turnover and profits made by its subsidiaries.
This approach has enabled it to avoid revealing details such as break-even costs, marketing and administrative expenses (SG & A), investments in R&D and overheads, he argues on the site gefraud.com.
To complicate the reading of its financial statements, GE has also regularly changed its accounting method, making it impossible to compare its performance over several years.
The analyst says that he has drawn his conclusions from the detailed study of 17 annual 10-K group reports spread over the period 2002-2018.
"The result is the discovery of an Enronesque business approach that has left GE on the verge of insolvency," Markopolos deduces.
The GE stock is currently down 7.6% at 8.3 dollars, wiping out the equivalent of more than 5 billion dollars of its market capitalization.
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