GE Web Update… Immelt & GE named in SEC Accounting Fraud Action – Fined $50 million

From the SEC:
 

Washington, D.C., Aug. 4, 2009

The Securities and Exchange Commission today filed civil fraud and other charges against General Electric Company (GE), alleging that it misled investors by reporting materially false and misleading results in its financial statements.

The SEC alleges that GE used improper accounting methods to increase its reported earnings or revenues and avoid reporting negative financial results. GE has agreed to pay a $50 million penalty to settle the SEC’s charges.

“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.”

“GE met or exceeded final consensus analyst earnings per share (EPS) expectations every quarter from 1995 through filing of its 2004 annual report. However, on four separate occasions in 2002 and 2003, high-level GE accounting executives or other finance personnel approved accounting that was not in compliance with Generally Accepted Accounting Principles (GAAP). In one instance, the improper accounting allowed GE to avoid missing analysts’ final consensus EPS expectations.”

The four accounting violations were:

Beginning in January 2003, an improper application of the accounting standards to GE’s commercial paper funding program to avoid unfavorable disclosures and an estimated approximately $200 million pre-tax charge to earnings.

A 2003 failure to correct a misapplication of financial accounting standards to certain GE interest-rate swaps.

In 2002 and 2003, reported end-of-year sales of locomotives that had not yet occurred in order to accelerate more than $370 million in revenue.

In 2002, an improper change to GE’s accounting for sales of commercial aircraft engines’ spare parts that increased GE’s 2002 net earnings by $585 million.”

Immelt was GE’s CEO at all times when the accounting fraud took place.

“Given the nature of the SEC charges, Obama should question the motivation and truthfulness of everything Immelt says, including the company’s support of cap-and-trade legislation,” said, National Center for Public Policy Research’s Dr. Tom Borelli, Immelt’s support of cap-and-trade has nothing to do with a concern for the planet, but everything to do with setting government mandates to purchase renewable energy products such as GE wind turbines.”
 
Oh, what a tangled web we weave, when first we practice to deceive…….
 
 “Ours is a government of checks and balances. The Mafia and crooked businessmen make out checks, and the politicians and other compromised officials improve their bank balances”. – Steve Allen
 
 

 

 

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