https://www.cnbc.com/2019/08/15/ge-s...ccounting.html

I'm not an accountant or a financial fraud expert, so I don't know what to make of this ... However, it does occur to me that there are stridently conflicting accounts and something doesn't add up.

Mr. Markopolos claims that General Electric has been systematically committing accounting fraud "... worse than Enron and WorldCom combined" and is probably on its way to bankruptcy. Top GE executives vehemently deny this insisting that Mr. Markopolos is wrong and, further, that Markopolos (and his unnamed hedge fund employer) are engaged in a "stock manipulation scheme - pure and simple." Clearly, they can't both be right.

Somebody has stepped in a big pile of doo doo. If Mr. Markopolos has made demonstrably false accusations against GE, both he - and the hedge fund he's working for - have exposed themselves to both civil and criminal liability. On the other hand, if what Mr. Markopolos is alleging turns out to be substantially true, top GE executives have probably exposed themselves to much the same. (If systematic financial fraud has been going on at the company, top GE executives - including the last 2-3 CEOs - would probably be guilty of violating the Sarbanes-Oxley Act. Sarbox requires CEOs to sign a statement, under penalty of perjury, attesting that their financial statements are true and accurate and no material facts have been omitted.) My understanding is that if a corporate CEO is found guilty of violating Sarbanes-Oxley, he/she can be sentenced to prison upon conviction.

I wonder ... If Harry Markopolos turns out to be right, again, and GE goes down in flames, would this be the largest corporate bankruptcy in American history?

GE recovering 2/3rds of yesterday's loss this morning. Looks like the market has read the report and doesn't really believe it.

That said, I think there's something there. Short sellers don't just randomly go and pick a company and lie about it. Someone aligned with Markopolos probably got a tip from a GE insider that prompted them to dig deeper.

GEs decision to counterattack doesn't seem like the cool confident response of someone who knows they are in the right.

That might be true is this was the GE of the Jack Welch days. But GE has been under duress for some time now. Perception is important.

Citron dumping on Markopolous

https://citronresearch.com/wp-conten...los-Report.pdf

tho Citron doesnt really say much beyond "aggressive accounting is not fraud"

thats... rich

I know nothing about this in general, but how big a deal is this long term care insurance stuff? If someone like GE went under, would this cause some domino effect of all these old folks in nursing homes losing their coverage and getting booted out? Or is this sort of coverage only a small part nursing home residents?

i would assume the optics of booting seniors out of nursing homes is terrible and likely some govt entity prob buys up the toxic asset. not sure how the coverage works tho. markopolous has said that other companies hedged via bond buying and were able to see ~10% profit against their losses and GE did not hedge but has -500% profit.

Markopolos is being irresponsible because he stands to gain financially. The report is bullshit! BTW, we are long GE...

Culp is looking at 200mm in equity compensation over the next 4 or 5 years as well

Wall Street Is Shrugging Off Allegations of GE Accounting Fraud

https://www.barrons.com/articles/wal...rt-51567525632

up ~5% on the news

Markopolos said he had more evidence and went completely MIA. Kinda seems like he did it purely to cash in.

GE has been know for “aggressive” accounting for decades, at least since Jack Welch started shifting profits to smooth out GE’s EPS growth.

Fraud is a whole different ball game. See how hard it was for the government to get fraud to stick to Arthur Anderson.

What GE did with its power business, renegotiating the term of contracts to lengthen the term while reducing the annual profitability, may not have been fraud but it was pretty dumb. The longer term contract was technically worth more so the deal could be booked as a non cash one time profit, while it weakened the company's annual cash flow and profitability. Of course, cash flow was never a problem as long as GE Financial could loan money to GE against the contracts. Until it couldn't anymore.

However, GE revealed this before Markopolos came along.


PairTheBoard

September 10, 2019 04:13 PM ET (BZ Newswire) -- News In addition,

BHGE announced that it has agreed to repurchase (the "share repurchase") from one or more of GE and its affiliates, in a privately negotiated transaction, $250,000,000 of shares of BHGE Class B common stock, par value $0.0001 per share (the "Class B common stock"), together with an equal number of associated membership interests of Baker Hughes, a GE company, LLC (the "LLC units") at a price equal to the price per share at which the underwriters will purchase shares of Class A common stock from the selling stockholders in the offering. The Company intends to fund the share repurchase with cash on hand and other available sources of liquidity. Although the share repurchase will be conditioned upon, among other things, the closing of the offering and will be completed immediately following the offering, the closing of the offering will not be conditioned upon the closing of the share repurchase. The offering and share repurchase have been unanimously approved by the Company's board of directors, and the share repurchase has also been unanimously approved by the Conflicts Committee of the Company's board of directors comprised of independent directors who are not affiliated with the selling stockholders.

not suspicious at all!

why would that be suspicious

Could somebody explain in plain English - to non-financial types like me - what this Baker-Hughes repurchase sale/agreement actually means? I'm particularly interested in whether this sale/share buyback - or whatever it is - strengthens Markopolous's GE fraud allegations.

It means GE wants to keep a significant stake (whatever $250,000,000 buys them) in Baker Hughes. Instead of setting a price, they'll just pay whatever the underwriters end up paying.

This is kind of standard in spinoffs and not suspicious at all, provided the class B shares don't have features making class B better than class A.

So GE up like 50% from the lows and https://www.gefraud.com/ now returns 403 Forbidden

lol Markopolos?