General Electric (NYSE:GE) shares fell Thursday after Madoff whistleblower Harry Markopolos targeted the conglomerate in a new report, saying it was hiding the depths of its financial problems.
The Wall Street Journal first reported the existence of the report and that it has read it, sending GE shares lower.
Markopolos told the WSJ the accounting issues he reveals amount to $38 billion. GE’s market value as of Wednesday’s close was $78.8 billion. He told the paper the insurance unit would need to raise reserves by more than $18.5 billion.
GE pointed out that Markopolos gave an unnamed hedge fund he’s work with access to the report ahead of time. Markopolos told the WSJ he’s also given it to securities regulators.
Markopolos had pointed out irregularities with Madoff’s investment strategy and how it was impossible to generate the returns the fraudster claimed years before the Ponzi scheme was exposed.
GE is already under investigation by the Justice Department and SEC for potential accounting practices. That includes a $22-billion charge the company took in the third quarter related to acquisitions made in its power business.
As for the latest report, GE "stands behind its financials,”according to a company’s statement. “We operate to the highest-level of integrity in our financial reporting and we have clearly laid out our financial obligations in great detail."
Shares retreated 55 cents, or 6.1%, to $8.48
