Markets

GE shares fall on report that cash situation worse than thought

Credit: REUTERS/Arnd Wiegmann

General Electric shares fell 5% on Thursday after Harry Markopolos, whistleblower in the Bernard Madoff Ponzi scheme case, alleged that company financial filings masked the depths of its problems.

Adds details from the report

Aug 15 (Reuters) - General Electric GE.N shares fell 5% on Thursday after Harry Markopolos, whistleblower in the Bernard Madoff Ponzi scheme case, alleged that company financial filings masked the depths of its problems.

Markopolos, in a research report, accused GE of hiding $38.1 billion in potential losses and claimed that the company's cash situation was far worse than disclosed in its the latest annual regulatory filing.

"GE's true debt to equity ratio is 17:1, not 3:1, which will undermine its credit status," said Markopolos, adding that the company's liquidity situation was "more serious than either the Enron or WorldCom accounting frauds".

In response to the report, GE said it "stands behind its financials" and operates to the "highest-level of integrity" in its financial reporting.

GE said in its statement that Markopolos is known to work for unnamed hedge funds that typically benefit from short selling a company's stock.

"We remain focused on running our business every day and ... will not be distracted by this type of meritless, misguided and self-serving speculation," the company said in a statement.

A disclaimer in the report stated that it was drafted by Forensic Decisions PR LLC, which will get compensation from a third-party entity that could benefit from a decline in GE's share price. The report did not name the entity.

GE shares were down 4.3% at $8.64 in premarket trading.

(Reporting by Ankit Ajmera in Bengaluru Editing by Saumyadeb Chakrabarty)

((ankit.ajmera@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 3067;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More