With markets looking to open in the red following Wednesday's stunning drop, the infamous Madoff Whistleblower (who was ignored for years) Harry Markopolos has picked Thursday to publish a report about GE's accounting strategies, claiming that the company's 'cash situation' is a lot worse than the company's filings would suggest.
GE, for its part, has said Markopolos's allegations are 'Entirely False and Misleading', of course, that didn't stop shares from plunging 7% in pre-market trading.
Markopolos told WSJ ahead of the report’s release, his group found GE’s insurance unit will need to bolster its reserves by $18.5 billion in cash and faulted the way the company is accounting for its oil-and-gas business. All told, he said, the accounting problems amount to $38 billion, or 40% of the conglomerate’s market value.
He added that this fraud was bigger than Enron and Worldcom combined.
GE shares were off 7% in premarket trade thanks to Markopolos's report, even though he's not saying anything that JPM's Tusa hasn't said already.
Readers can download the report here:
And read it here: