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General Electric rebuts allegations of accounting fraud

Blair Shiff

General Electric on Monday extended its counterattack against last week's serious allegations that it committed accounting fraud on multiple levels.

GE's head of investor relations emailed a multi-page rebuttal against the accusations contained in a detailed research report from forensic accountant Harry Markopolos. He is best known as the person who discovered the evidence that showed Bernie Madoff's wealth management business was a giant Ponzi scheme and called it to the attention of the SEC.

Markopolos’ report on GE, which came out Thursday, concluded that the struggling conglomerate's accounting missteps total $38 billion, or about 40 percent of its market value. The drop in GE shares was the worst in 11 years.

“The fact that he wrote a 170-page paper but never talked to company officials goes to show that he is not interested in accurate financial analysis, but solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit,” General Electric CEO Larry Culp told FOX Business in an emailed statement.

And one of GE's independent directors also pushed back against Markopolos' allegations.

“The representations by Mr. Markopolos about GE’s accounting practices are simply not accurate," said GE independent director and Audit Committee chair Leslie Seidman, who is also the former chair of the Financial Accounting Standards Board. "The report contains numerous novel interpretations and downright mistakes about the actual accounting requirements, making his conclusions about GE’s reporting questionable at best.”

GE said it always takes financial misconduct allegations seriously.

“This is market manipulation – pure and simple," Culp told FOX Business in an emailed statement. "Mr. Markopolos’s report contains false statements of fact, and these claims could have been corrected if he had checked them with GE before publishing the report.”


The SEC says it is monitoring the situation between Markopolos and General Electric.

GE's Troubled Timeline:



  • January: GE altered its agreement with the rail-transport company Wabtec in order to receive $2.9 billion of cash in exchange for giving up more equity.
  • March: Warns it could have a negative free cash flow of up to $2 billion this year.
  • June: Reports strong first-quarter results, bolstered by its aviation unit.

FOX Business' Jonathan Garber contributed to this report.

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