General Electric CEO calls the scathing report that accuses the company of Enron-like fraud 'market manipulation - pure and simple'
- GE CEO Larry Culp fired back at accounting expert Harry Markopolos on Thursday, calling his allegation of fraud an act of "market manipulation" done for personal gain.
- GE shares plunged by as much as 14% on the report.
- The report alleged GE was committing fraud "bigger than Enron and WorldCom combined," and that the company's accounting left it "on the verge of insolvency."
- The company's audit committee director also hit back at Markopolos and called on readers to "carefully consider the motivation behind this report."
- Watch GE trade live here.
General Electric's CEO fired back at a report that alleged the company was committing fraud, calling the document "market manipulation" and accusing its author of intentionally sending the stock down for personal profit.
CEO Larry Culp said Harry Markopolos - the accounting expert who wrote the report - never reached out to the company for a statement or to check facts. The claims made in the document could have been corrected had the author consulted GE, Culp said, adding that Markopolos' actions show he cared more about personal gain than thorough reporting.
"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."
The 175-page report alleged GE was committing fraud "bigger than Enron and WorldCom combined." It claimed the researchers behind the report already found $38 billion in fraud, with the figure serving as "merely the tip of the iceberg."
Markopolos, a whistleblower who previously warned of Bernie Madoff's Ponzi scheme, said the alleged fraud has left GE "on the verge of insolvency."
Leslie Seidman, the director of GE's audit committee, said the report contained "numerous novel interpretations and downright mistakes" about how the company's accounting. She added that Markopolos "stands to personally benefit from today's significant market reaction to his report" and called on those who read the document to look at it with a different perspective.
"I urge readers to carefully consider the motivation behind this report as well as the reliability of the analysis underlying his opinions," Seidman said in a statement.
GE traded as much as 14% lower Thursday on news of the report. Should the company's shares close down more than 12.8%, it will be GE's worst-performing day since October 19, 1987 - also known as Black Monday.
GE traded at $8.09 per share as of 3:15 p.m. ET Thursday, up about 10% year-to-date.
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