GE CEO Culp calls Markopolos report accusing company of fraud pure 'market manipulation'

    0
    1
    This post was originally published on link to post

    Larry Culp, CEO, General Electric

    Scott Mlyn | CNBC

    GE’s CEO said the accusations of fraud by Madoff whistleblower Harry Markopolos are false, and driven by market manipulation.

    “GE will always take any allegation of financial misconduct seriously. But this is market manipulation – pure and simple,” Lawrence Culp, chairman and CEO of GE said in a statement. “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.”

    Culp said the fact that Markopolos never talked to company officials before publishing the report “goes to show that he is not interested in accurate financial analysis, but solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit.”

    Markopolos on Thursday targeted GE in a 175-page report, accusing the conglomerate of issuing fraudulent financial statements to hide the extent of its accounting problems.

    A U.S. hedge fund, that Markopolos wouldn’t name, paid Markopolos to research and publish his report, and Markopolos told CNBC that he was getting a “decent percentage” of profits that the hedge fund would make from betting against GE.

    The report enumerates a litany of accounting irregularities that he says add up to a $38 billion fraud, equivalent to more than 40% of GE’s market capitalization. Much of the report focuses on GE’s business of reinsuring long-term care insurance providers. 

    “It’s going to make this company probably file for bankruptcy,” Markopolos told CNBC’s “Squawk on the Street. ” “WorldCom and Enron lasted about four months. … We’ll see how GE does.”

    GE stock, which has long been under pressure,  fell 13% following Markopolis’ report, marking its largest one-day percentage loss since the October 1987 stock market crash.

    Markopolios’ report noted that GE has long history of accounting fraud, dating back to as early as 1995, when it was run by Jack Welch.

    He called the alleged insurance fraud “bigger than Enron and WorldCom combined.”

    —This is a developing story. Check back for updates.

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here