Our comment on the first report of Markopolos' GE analysis:
Back in the Madoff days Mr. Markopolos.seemed pretty levelheaded.From Financial Crime Education:
Going with the "Bigger fraud than Enron" means one of two things. He's looking for headlines or General Electric is toast.
Ex-SEC chief accused Madoff whistleblower, Harry Markopolos of targeting GE for a short-seller
Former SEC Chairman Harvey Pitt on Monday questioned the motivation of Harry Markopolos, the Bernie Madoff whistleblower who unveiled a long list of allegations against General Electric last week in an investigation for a short seller.Commissioner Pitt was a bit of a punching bag during his (short) term, what with Enron imploding and the markets getting crushed 2001 - 2003. On the other hand he also seemed slippery and in-over-his-head.
“One of the ways you can test Markopolos’ bona fides, however, is the fact that the SEC has a whistleblower provision. And if he had brought all of his data to the SEC first, he would reap potentially up to 30% of the potential recovery that the SEC might obtain in connection with this case, ” Pitt told CNBC.
“Instead what he did was go public, blast the company without giving the company a chance even to address his concerns,” Pitt said. “Those are factors that make this look suspicious.”
Jacob Frenkel, former senior counsel for the SEC Division of Enforcement, said Markopolos “stepped up the risk to himself, and to others, by going public as opposed to letting the SEC run its process.” Frenkel said that regulators are going to want to know the “intent behind issuing the information publicly” and whether Markopolos’ information is accurate.
Pitt and Frenkel, appearing together for a “Squawk Box” interview, spoke before GE issued a more detailed response to Markopolos’ allegations. “We operate with absolute integrity and stand behind our financial reporting,” wrote Steve Winoker, vice president of GE investor communications. He added that GE believes it has sufficient reserves for its long-term care insurance business and that its consolidated financial statement for its investment in Baker Hughes was proper.
In a 175-page report, which made headlines Thursday, Markopolos accused GE of issuing fraudulent financial statements to hide the extent of its accounting problems in a $38 billion fraud bigger than Enron. In a CNBC interview, Markopolos said GE is a bankruptcy waiting to happen. Best known for pointing out irregularities with Madoff’s investment strategy years before the Ponzi scheme was exposed, Markopolos also disclosed that he conducted the research into GE at the behest of a hedge fund, which he refused to name. “I have a family to support,” he added.....MORE
Previously:
"GE shares tank more than 13% after Madoff whistleblower calls it a 'bigger fraud than Enron'"
"GE rebounds after CEO share purchases, Wall Street analysts come to company’s defense"
