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

Discussion in 'Wall St. News' started by ETJ, Aug 15, 2019.

  1. ETJ


    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.
    "The claims made by Mr. Markopolos are meritless," GE said in a statement, adding that it "has never met, spoken to or had contact with Mr. Markopolos, and we are extremely disappointed that an individual with no direct knowledge of GE would choose to make such serious and unsubstantiated claims."
    Markopolos made several comparisons to Enron in his report and also on a new website with the URL He accused GE of using what he dubbed "the 'GEnron' playbook."
    "GE has been running a decades-long accounting fraud by only providing top line revenue and bottom line profits for its business units and getting away with leaving out cost of goods sold" in addition to various other expenses," Markopolos claims.
    He also took issue with how GE accounts for its majority stake in oil services firm Baker Hughes and accused the company of hiding more than $9 billion in losses in its separately traded BHGE(BHGE) unit.

    Despite the big drop Thursday, the stock is still up 10% this year, as new CEO Larry Culp has been busy selling off non-core assets to shore up cash.
    Those sales may also help turn GE around by making the notoriously complex company leaner and more focused on the power and renewable energy, aviation and healthcare businesses that continue to have solid growth prospects.

    GE could sell its stake in dozens of startups

    GE was not immediately available for further comment about the Markopolos claims. But in its statement, the company took issue with Markopolos' allegations about accounting in its insurance unit, saying that "current reserves are well-supported for our portfolio characteristics."
    GE also defended how it accounts for its BHGE stake and added that it has "a strong liquidity position" -- with ample cash and access to credit lines.
    The company noted that "Mr. Markopolos openly acknowledges that he is compensated by unnamed hedge funds" and added that these funds are "financially motivated" to profit from short selling the stock, a move that could push shares lower and "create unnecessary volatility."
    Still, Markopolos points out in his report that he is not making any investment recommendations, adding that "GE's current and past employees are the victims here as are GE's lenders, vendors, and customers all of whom have to deal with the aftermath of an accounting fraud."
    Markopolos is far from the only one critical of GE's accounting.
    Activist shareholder firm CtW said in an April letter to GE's lead independent board director Thomas Horton that "misguided capital allocation strategies and multiple shareholder derivative lawsuits...cast doubt over the company's financial health."
    CtW also took issue with GE's continued relationship with auditing firm KPMG, which has been reviewing GE's books for more than a century. Several other activist shareholders also urged GE to dump KPMG, and GE said in December that its audit committee will consider making a change -- but not until 2020 at the earliest.
    KPMG declined to comment about its business relationship with GE because of "client confidentiality requirements."
  2. murray t turtle likes this.
  3. maxinger


    humans are predictable.

    there will be people looking at support level, and waiting to buy GE thinking it is dirt cheap.
    They would think it is soo cheap and it wouldn't get any cheaper.
    They simply like buying such stocks.
  4. insiders or people who are shot the stock or sold a lot of naked shorts want to destroy the company and buy back in the pennies. they want the company to fail or sabotage it. Heavily in debt companies like GE or any company can be sabotaged that is the risk of owning stocks. and why CEO are paid stock options, the CEO can destroy the company or embezzle company funds via buying inflated assets or mergers garbage..
    murray t turtle likes this.
  5. %%
    Buy to cover his shorts ?? :caution::caution:Anyway most all the GE trends are down/ bear trends from $60 area. NOT a prediction+ sure not a stock tip. Thanks
  6. GE is a massive fraud, the Thesis made by Harry and his group is the most well written one I have ever come across... Next week their bonds will plummet, markets aren't as smart as people think they are

    Passive investment and algo's are dumb as fuck, it's all good until it hits a Argentina day, then they all flee same time and ultimate crater... GE Bonds are worth 0, nada, they are getting junked in few weeks tops. They have wayyy more liabilities then assets, even at the mark to model scam ratio
  7. I would not touch GE with a 10000 foot pole. I made good money getting in during the Single digit GE days back in the meltdown days but I do not see anything at all that would tempt me to jump in.
    murray t turtle likes this.