The CEO of General Electric (NYSE:GE) Larry Culp has been working hard to get the company back to its feet. His efforts seemed to work because the business had started gaining stability after repaying most of its debts. The high hopes of investors have however been cut short by the financial fraud investigator Harry Markopolos.
This American former securities industry executive is still the same person that that spoke against the Bernie Madoff’s Ponzi scheme. It was a scheme that resulted in clients loosing huge amounts of their investments and Harry’s sentiments made him famous. The official is up again and this time around it is GE on the spotlight. He asserts that GE has been conducting fraudulent activities for over a decade.
On the other hand, the business refutes these claims saying the fraud investigator needs to provide stronger evidence.
The scandal has caused the stock of the company to decline significantly. In fact, for over 11 years GE has never witnessed its stock go down by such a magnitude. Culp knows he has to strategize a new to help the conglomerate gain momentum.
The stand off
Markopolos defended his claims using a 175-page report. The company says that the report doesn’t adequately prove that it bend some rules. The fraud investigator claims the business commited fraud for an amount adding up to $38 billion. He added that the company employed some accounting tricks. That was how it managed to hide huge amounts of losses the insurance business incurred.
Culp isn’t about to let Markopolos go without putting up a fight. In its defense, the official has led his company to speak against the claims by the fraud investigator. The leader says they are pleased about having repaid most of their debts and gaining stability. According to Culp, Markopolos wasn’t telling investor something knew since they understood the company’s progress and real status.
The lead research analyst at Melius Research Scott Davis in a recent interview said that the report disappointed him a great deal. He downplayed the investigators report asserting it was of no use for investors and everyone.