The General Electric case attracts more card sellers: S3 Partners

NEW YORK (Reuters) – Gaming Against General Electric Co ( GE.N ) stock has risen over the past week as the stock fell following a report from fraud researcher Harry Markopolos who questioned the conglomerate's accounts, financial analyst firm S3 Partners said on Tuesday.

Short sales, or assuming GE's share price will fall, rose 13.5% to $ 14.3 million last week and 20.7% to $ 20.6 million last month, Ihor Dusaniwsky, CEO of Predictive analysis by New York-based S3 Partners, Reuters told.

GE shares dropped 3.3 percent to $ 8.38 on Tuesday, down about 7 percent since Markopolo's report came out last Thursday.

S3 Partners uses an algorithm to calculate daily interest rates based on market data and insights from $ 2 trillion in assets the company has under advisement, Dusaniwsky said.

The company estimates that short sales unrealized profits have increased 7.3% over the past week and 18.6% over the past month. The data also suggests that several short sellers have been betting on GE's stock and that no major investor has closed or covered its short position, the company says.

"When card sellers see something like that, they tend to jump in like a package," Dusaniwsky said. "We haven't seen any coverage in size."

Markopolos, who blew the whistle on Bernard Madoff's Ponzi scheme, said GE was hiding deep financial problems on Thursday and was heavily rebuked by GE's new CEO. He said he worked with an undisclosed hedge fund to make short sales.

Concerns raised by the report were repeated on Tuesday by Fitch Ratings, which ranked GE near the top of high-risk insurance companies.

GE withdrew the defense of the insurance accounts on Monday.