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GE On The "Verge of Insolvency" claims whistleblower report



GE stock fell sharply on Thursday after a whistleblower report accused the company of conducting a "bigger scam than Enron", according to a website created specifically to address the problem, gefraud.com.

The report's author, Harry Markopolos, was also an alert during the Enron scam.

In the report, Markopolos claims that GE, which the site refers to as "GEnron", hides serious financial problems. In a statement to the media, GE emphatically refused to ever talk to or contact Markopolos. While GE had not yet read the report at the time of the statement, it denied the allegations it had heard.

"Although we cannot comment on the detailed content of a report that we have not seen, the allegations we have heard are completely false and misleading," said GE's statement, as reported by CNBC.

In particular, the report claims that GE Over the years, the reporting format for accounting has changed every couple of years to make it almost impossible to compare figures year by year in an effort to hide adverse economies. For decades, according to Markopolos, GE has provided top-line revenue and bottom-line profits, and leaves the COGS, SG&A, R&D and overhead scams as deep as $ 38 billion, the report states.

The report also claims there are problems with how GE handles the accounting of its oil and gas segment, Baker Hughes. is already facing a lawsuit announced earlier this week under the way it handled the nearly $ 8 billion merger with its oil and gas segment. oint Fund claims that Baker Hughes was falsely led into the deal by using "false uncontrolled finances" according to Bloomberg Law. Today's report claims that GE tried to hide the $ 9.1

billion loss over the Baker Hughes transaction from some fancy accounting footwork that violates FASB accounting standards.

GE is now at the "border of insolvency" according to gefraud.com, despite its best efforts to hide the case from its shareholders.

In total, the 125 report paints a bleak picture of GE's finances, but according to the disclosures there is additional information that was not disclosed in the public version of the report, which was instead forwarded to law enforcement agencies.

While uncanny, the fine print of the report's disclosures contains the statement that the report, published August 15, was first provided to a third party in exchange for compensation that was "based on the percentage of profits from third party entities' positions in securities, derivatives and other financial instruments to and / or related to the General Electric Company (& # 39; GE & # 39;) (NYSE: GE). These third-party positions are designed to generate profits if the price of GE securities would decline . "

And they would drop. At 2:24 pm EDT, the GE stock had dropped $ 1.50 per share (-11.63%) to $ 7.98.

Off Julianne Geiger for Oilprice.com

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