Dollars & Sense: Crime Pays For General Electric

[marmar]

Crime Pays For General Electric
by Dollars and Sense


For years GE had a perfect record of earnings. Too good to be true? Apparently. According to the SEC, the company inflated savings and earnings through illegal accounting practices to the tune of $800 million. Although the profits weren't real, the executive bonuses were. But those are safe. Now the poor suckers who still own GE stock are left holding the bag for a $50 million fine.

From the Washington Post:

General Electric has agreed to pay $50 million to settle federal charges that it committed accounting fraud by reporting false financial results, the Securities and Exchange Commission said Tuesday.

The SEC filed civil fraud charges against GE, alleging that fraudulent accounting had allowed the company to boost its reported earnings and avoid disclosing negative results.

"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 did not admit or deny the allegations in settling the charges.

"We have concluded that it is in the best interests of GE and its shareholders to resolve this matter and put it behind us on the basis announced today," the company said in a statement.

The SEC alleged that four times in 2002 and 2003, GE staff approved financial results that were not compiled using the accounting rules that public companies are required to follow. In one instance, the accounting fraud allowed GE to meet analysts' expectations for its quarterly earnings though the actual results were worse, the agency said.

The SEC did not give a figure for the size of the alleged fraud. But the agency said at least one accounting change resulted in $200 million in savings for the company and another was able to boost the company's earnings by $585 million.

The violations occurred throughout the company, from its financing arm to sales of trains and aircraft parts, the agency alleged.

The SEC said GE has corrected the violations and cooperated with the investigation.

http://www.dollarsandsense.org/blog/2009/08/crime-pays-for-general-electric.html

[hobbit709]

1. The only way this crap will cease

If they implement REAL penalties and send some execs to a REAL jail.
Corporations that engage in illegal practices should have their charters revoked.

[HysteryDiagnosis]

2. They bring good things to life? Heh. n/t