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GE Stock Has Worst Day in 11 Years After Madoff Whistleblower Calls It a Bigger Fraud Than Enron

posted by takyon on Friday August 16 2019, @11:22PM   Printer-friendly
from the electric-slide dept.

upstart writes:

Submitted via IRC for SoyCow2718

GE stock has worst day in 11 years after Madoff whistleblower calls it a bigger fraud than Enron

General Electric shares plunged more than 11% Thursday after Harry Markopolos, who is famous for blowing the whistle on Bernie Madoff's Ponzi scheme in 2008, accused GE of orchestrating a massive fraud.

GE CEO Larry Culp on Thursday bought 252,200 shares at $7.93 per share, a purchase worth almost $2 million, according to an SEC filing. The buy helped bump GE's share price around 2% in after-hours trading. Culp's ownership of GE stock nearly doubled this week after an earlier purchase Tuesday. GE Board Director Leslie Seidman called the fraud allegations "baseless" and "inflammatory" in an interview on CNBC's "Closing Bell" Thursday evening. She said Markopolos' claims do not "reflect the GE I know." Seidman chairs of the board's audit committee.

Markopolos said in a report released Thursday that GE was hiding nearly $40 billion of losses in its insurance business. He said this is the largest case of accounting fraud he and his team have investigated. "In fact, GE's $38 billion in accounting fraud amounts to over 40% of GE's market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds," Markopolos wrote in the report, referring to the scandals that eventually helped bankrupt energy giant Enron in 2001 and long-distance telco WorldCom in 2002. GE strongly denied Markopolos' allegations.

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  • (Score: -1, Troll) by Anonymous Coward on Saturday August 17 2019, @04:27AM (4 children)

    by Anonymous Coward on Saturday August 17 2019, @04:27AM (#881433)

    It 'sounds' credible. Right up to the point where he shorted it.

    So it could be 100% right. But then he turned it into a pump and dump lookalike. Why....

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  • (Score: 0) by Anonymous Coward on Saturday August 17 2019, @07:47AM (3 children)

    by Anonymous Coward on Saturday August 17 2019, @07:47AM (#881463)

    Why not?

    If it is true, and they spent the time/money investigating, why shouldn't they profit ?

    If it turns out to be false, then they will probably will be prosecuted.

    • (Score: 0) by Anonymous Coward on Saturday August 17 2019, @02:36PM (2 children)

      by Anonymous Coward on Saturday August 17 2019, @02:36PM (#881532)

      If true. But what if this group doesn't have the full picture? Additional credit facilities or rereinsurance contracts perhaps.
      Is Markopolos the group's face man to capitalize on his notability from 2008?
      The safest thing to do would have been to approach the SEC and let them do an investigation that, if their information was complete and correct, would have lowered the market price. Instead, they went to the unsophisticated investor with cute graphics of GE-Enron logos for a quick buck.

      • (Score: 0) by Anonymous Coward on Saturday August 17 2019, @02:58PM

        by Anonymous Coward on Saturday August 17 2019, @02:58PM (#881536)

        I just looked him up on Wikipedia:

        Critics of Markopolos have called him obsessive, a self-publicist, and self-righteous, and some questioned whether he was motivated by a financial bounty, which he denied.[7][8][9] The Wall Street Journal described him as "a little bit nuts".[7] In his book, he revealed that at one point he kept an old army gas mask handy in case SEC investigators burst into his home with teargas.[7] He wrote in his book: "If [Madoff] contacted me and threatened me, I was going to go down to New York and take him out. At that point, it would have come down to him or me, [and] I felt I had no other options: I was going to kill him."[10]

        Could just be a windbag (who's a little bit nuts).

      • (Score: 0) by Anonymous Coward on Saturday August 17 2019, @05:16PM

        by Anonymous Coward on Saturday August 17 2019, @05:16PM (#881555)

        That is my point exactly! He *wants* them to blow up. He is actively trying to do so. It makes it look like a pump/dump. It could still be 100% right. But the way he is doing it is quite unorthodox. The correct way is like you point out. SEC->buy shorts. Keep quite.

        If he is 100% wrong though and is pump/dump this big. He is going to get his shit pushed in by the org he should have went to...