GE to pay $50 million in fines to settle SEC fraud charges

August 4, 2009 by · Leave a Comment
Filed under: Stock Market News 

Here is my favorite quote: “GE bent the accounting rules beyond the breaking point, Overly aggressive accounting can distort a company’s true financial condition and mislead investors.” Funny how GE will get this statement made against it but nothing for many of the banks that have used off-balance sheet transactions to hide massive amounts liabilities in various derivatives.  This stuff is not even hidden, just look at the capitalization of the top 25 banks and they have a nice little line for derivative exposure (Page 22).  To be fair, GE does have a finance unit and they are treated as a bank holding company but I would like the SEC to review other institutions as well, I think many of the accounting practices used over the last 5 years needs to be seriously reviewed for there impact on investors and the financial system as a whole.

Reuters, Boston – General Electric Co will pay a $50 million civil penalty to settle charges by the U.S. Securities and Exchange Commission that it misled investors with some fraudulent accounting in 2002 and 2003.

The SEC found that the largest U.S. conglomerate had intentionally wrongly accounted for some commercial paper hedging activity and the sales of railroad locomotives, in an effort to make its financial results look better.

The world’s largest maker of jet engines and electricity-producing turbines said on Tuesday it did not admit or deny wrongdoing as part of the settlement.

“GE bent the accounting rules beyond the breaking point,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “Overly aggressive accounting can distort a company’s true financial condition and mislead investors.”

Two other accounting irregularities, regarding how GE accounted for swap derivatives and for how it recorded profit on sales of spare parts for jet engines were negligent, but not intentional violations, the SEC found.

Click Here to Continue Reading

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!