http://smirkingchimp.com/thread/rj-eskow/34304/in-the-dark-crimes-capital-crimes-and-ge-capital-crimesCan a crime be committed if there is no criminal to commit it? According to the Securities and Exchange Commission, the answer to that Zen koan is apparently "yes." The SEC collected a $50 million settlement from GE Capital after concluding that the corporation "misled investors" by committing accounting and bank fraud, but then apparently decided that no individuals were responsible.
GE has been one of corporate America's worst repeat offenders, with a long history of settlements and guilty pleas. Its behavior in this case casts a spotlight on the world of "shadow banking," where institutions can behave like banks without being banks. That's another koan-like statement, and it's a very convenient one that lets them avoid a lot of oversight and regulation.
The SEC concluded in this case that General Electric used the financial tools available to its shadow-banking subsidiary, GE Capital, to deceive investors by booking revenues for the sale of locomotives the company hadn't actually sold yet. The company also "improperly overstated GE's 2002 net earnings by approximately $585 million" for its aircraft engine parts division, says the SEC, although that and other offenses were allegedly performed in more traditionally fraudulent ways.
There's lots more in the SEC's report, and the words of its complaint in this case carry a certain weight and depth. Among other findings, the SEC concluded that "GE, acting primarily through senior corporate accountants, engaged in knowing or reckless fraudulent activities resulting in numerous materially false and misleading statements or omissions in connection with the January 2003 change in CP hedging methodologies and the recognition of revenues and profits in the fourth quarters of 2002 and 2003 for the bridge financing transactions."
More at the link --
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