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Alleged GEscam

Unread postPosted: Fri 16 Aug 2019, 03:43:15
by EdwinSm
Regardless of the new allegations of massive fraud at GE, there does seem to be a history of trouble.

In the past two years GE has announced more than $40bn in writedowns and accounting charges. The company has also disclosed that its accounting is being investigated by the Securities and Exchange Commission and the Department of Justice.
https://www.bbc.com/news/business-49352765

I haven't read the 175 page report {Found at https://www.gefraud.com/}, so I will have to reserve my judgement on the whole thing, but I did find the GE Rebuttal to be very short on dealing with the actual allegations (more an attempt to deflect) https://www.genewsroom.com/press-releases/ge-addresses-claims-harry-markopolos

There seems to be a large oil and gas component to the allegations (although health insurance seems to be the biggest area of concern)
Another allegation in the report says that GE should have recorded $9.6 billion of losses from Baker Hughes, an oil-and-gas company it owns, instead of the $2.2 billion it reported.

https://www.msn.com/en-us/news/politics/madoff-whistleblower-alleges-ge-is-a-bigger-fraud-than-enron/ar-AAFR7wn

Re: Alleged GEscam

Unread postPosted: Fri 16 Aug 2019, 05:43:01
by EdwinSm
I spent the afternoon skimming the report (although 175 pages long most are in simple graphical presentation format allowing a quick overview).

The Long Term Care Insurance seem to be in a very bad way, but I don't have enough accounting experience in insurance to judge that properly. However, if the allegations are correct then there has been significant lying in company advice to investors.

Regarding Baker Hughes there seems to be compelling reason for the allegations of fraudulent reporting (ie double reporting the assets in contravention of accounting laws).

The past history of fraud by GE and the small punishments when found out is of great concern...another case of Too Big To Fail ?

Re: Alleged GEscam

Unread postPosted: Fri 16 Aug 2019, 06:00:59
by Cog
The author of this "report" is shorting GE stock with a third party. Grain of salt is about what I would give it. If the author had something credible he should have given it to the SEC and not leaked it to affect stock prices.

Re: Alleged GEscam

Unread postPosted: Fri 16 Aug 2019, 20:32:08
by Outcast_Searcher
Cog wrote:The author of this "report" is shorting GE stock with a third party. Grain of salt is about what I would give it. If the author had something credible he should have given it to the SEC and not leaked it to affect stock prices.

1). According to the articles I read (on NYT and Bloomberg), he DID submit the report to the SEC.

2). This is the same guy who was right about Enron, and he gave that info to the SEC and the SEC repeatedly ignored it, much to their embarrassment. Maybe they'll actually check it out this time.

...

I'm not saying this has legs. I'm saying it's worth a look, and your assumption on him not telling the SEC is wrong.

When GE got very low in early 2009, I was afraid to buy a bunch of it because I was concerned about the possibility of accounting fraud, and how complex their books are.

I think just flat ruling it out because of false assumptions is a bad idea.