General Electric renews defense against charges of bogus accounting
By Alwyn Scott
NEW YORK, Aug 19 (Reuters) - General Electric Co
further defended itself on Monday against fraud investigators
who said last week the Boston-based conglomerate had failed to
put aside money to cover $29 billion in potential insurance
losses and had improperly counted profit from subsidiary Baker
Hughes as its own.
"Our future liabilities (on long-term care insurance) depend
on variables that will play out over decades, not years, and are
dictated by rigorous testing processes, sound actuarial
analysis, and the application of regulatory and accounting
rules," Steve Winoker, head of investor relations at GE, said in
a six-page rebuttal sent out via email.
"As a majority shareholder of BHGE," Winoker added, "we are
required to report BHGE on a consolidated basis under U.S. GAAP"
GE's comments follow a report https://www.gefraud.com last
week that alleged there was fraud in the company's accounting.
GE has disclosed that its accounting is being investigated by
the U.S. Securities and Exchange Commission and the Department
GE's shares fell as much as 15% on Thursday after financial
investigators Harry Markopolos and John McPherson published the
175-page report. GE shares recouped much of the
decline on Friday. On Monday, GE shares were down 0.3% at $8.77
in late morning trading.
Markopolos, best known for raising early alarms about
Bernard Madoff, who was arrested in 2008 for running a Ponzi
scheme, said he would share in profits from a midsized U.S.
hedge fund that sold GE shares short before the report came out.
Short sales are bets that a share price will fall.
(Reporting by Alwyn Scott in New York
Editing by Matthew Lewis)
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