General Electric is fighting back after Harry Markopolos, who made a name for himself by blowing the whistle on Bernie Madoff’s Ponzi scheme, claimed the company was “a bigger fraud than Enron.” Clearly those are fighting words that could make things pretty awkward at whatever Hamptons fundraiser they all run into each other at over Labor Day.
Markopolos, who was paid to research and publish his findings by a hedge fund that he refuses to name, targeted the giant company in a new 175-page report, accusing it of issuing fraudulent financial statements to hide the extent of its problems. As part of his report’s marketing plan, he set up the website www.GEfraud.com to spread the gospel of GE’s “Enronesque business approach that has left GE on the verge of insolvency.”
Shares of GE fell more than 13% on Thursday after Markopolos went on CNBC’s Squawk on the Street to share the results of his seven-month-long investigation, accuse the company of a $38 billion fraud and claim that GE is on the verge of insolvency and has a “long history” of accounting fraud.
GE disagrees. “GE will always take any allegation of financial misconduct seriously. But this is market manipulation–pure and simple,” H. Lawrence Culp, Jr., chairman and CEO of GE, said in a statement sent to Fast Company. “Mr. Markopolos’s report contains false statements of fact, and these claims could have been corrected if he had checked them with GE before publishing the report.”
Culp also claimed that Markopolos never talked to company officials before publishing the report, which “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.”
In short, just assume everyone here wants to make a buck, and keep all your money under your Casper mattress.