- General Electric’s CEO, Larry Culp, reportedly bought roughly $US2 million of the company’s stock after he and GE were accused of fraud, per CNBC.
- It comes after accounting expert, Harry Markopolos, released a 175-page report detailing how GE had been committing fraud, saying it was a bigger scandal than Enron and WorldCom combined.
- Culp hit back at Markopolos, saying that “this is market manipulation – pure and simple.”
- View markets Insider for more stories.
Larry Culp, the CEO of General Electric, reportedly bought nearly $US2 million worth of the company’s stock after the company was accused of fraud.
Culp and GE were accused of fraud this week by accounting expert Harry Markopolos and hit back suggesting the claims were “market manipulation.” The CEO bought 252,200 shares for roughly $US7.93 each, coming to about $US2 million dollars, CNBC reported, citing an SEC filing.
In the report, the whistleblower said that GE’s accounting was a bigger case of fraud than Enron and WorldCom combined.
“In fact, GE’s $US38 billion in accounting fraud amounts to over 40% of GE’s market capitalisation, making it far more serious than either the Enron or WorldCom accounting frauds,” Markopolos said in the report.
Markopolos, who had been working on the Madoff Ponzi scheme also said the $US38 billion figure was just “merely the tip of the iceberg.”
Markopolos’ report refers to the 2001 Enron scandal, a Houston based energy company, which went bankrupt after execs were discovered to have used loopholes to inflate the value of Enron.
“To prove GE’s fraud we went out and located the 8 largest Long-Term Care (LTC) insurance deals that GE is a counterparty to, accounting for approximately 95% or more of GE’s exposure. Either these 8 insurance companies filed false statutory financial statements with their regulators or GE’s financial statements are false,” the report said.
However, GE and Culp hit back at Markopolos. GE’s Ceo Larry Culp said the report was market manipulation, and accused Markopolos of sending the stock tanking for personal gain. GE’s stock dropped 14% on the report.
“GE will always take any allegation of financial misconduct seriously,” Culp said in a statement.
“But this is market manipulation – pure and simple. 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.”
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