Boston-based GE first disclosed the government investigation into its accounting practices in 2018, after a multibillion-dollar underestimate of its insurance business created a shortfall in its reserves. At the time, then-Chief Financial Officer Jamie Miller said on a conference call with analysts, “There’s nothing here I‘m overly concerned about.” The SEC also delved into how GE recognized revenue from long-term service agreements for the maintenance of industrial equipment, including power plants and jet engines.

In a statement Tuesday to The Washington Post, GE said it has “fully cooperated with the SEC’s investigation,” adding, “We strongly disagree with the recommendation of the SEC staff and will provide a response through the Wells notice process.” GE said it is providing documents and other information requested by the SEC.

The SEC declined to comment.

GE will be given an opportunity to make a case against enforcement. But if the government proceeds, it could seek an injunction against future violations of securities law and impose fines. GE acknowledged a level of uncertainty in the filing on what the investigation means for its business: “The results of the Wells notice and any enforcement action are unknown at this time.”

Like other companies in the aviation business, GE has been battered by the coronavirus. In May, the company said it would cut 13,000 jobs from its jet engine operation. Industry executives have said it will take years for the aviation business to return to pre-pandemic levels. From its recent peak in February, the value of GE shares has been cut in half.

News of the Wells notice shook investors further, and the stock slumped 3.7 percent to close at $6.17. But the broader market was also hit by an update from President Trump, who tweeted Tuesday afternoon that he was withdrawing from stimulus negotiations until after

(RTTNews) – General Electric (GE) disclosed in a regulatory filing on Tuesday that it received a “Wells notice” from the U.S. Securities and Exchange Commission staff, saying that it is considering recommending a civil action against the company for possible violations of the securities laws.

GE has been informed that the issues the SEC staff may recommend that the SEC pursue relate to the historical premium deficiency testing for GE Capital’s run-off insurance operations, as well as GE’s disclosures relating to such run-off insurance operations.

The staff has not made a preliminary decision whether to recommend any action with respect to the other matters under investigation, the GE said in the regulatory filing.

GE noted that the Wells notice is neither a formal allegation nor a finding of wrongdoing.

The Wells notice allows GE the opportunity to provide its perspective and to address the issues raised by the SEC staff before any decision is made by the SEC on whether to authorize the commencement of an enforcement proceeding.

GE said it disagrees with the SEC staff with respect to the recommendation and will provide a response through the Wells notice process. If the SEC were to authorize an action against GE, it could seek an injunction against future violations of provisions of the federal securities laws, the imposition of civil monetary penalties, and other relief within the Commission’s authority.

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(Bloomberg) — General Electric Co. warned that it’s likely to face U.S. Securities and Exchange Commission allegations of accounting misdeeds, setting back Chief Executive Officer Larry Culp’s effort to put the company’s rocky past behind it.



a close up of a sign: A logo is displayed on a wind turbine used for training and research outside of the General Electric Co. (GE) energy plant in Greenville, South Carolina, U.S., on Tuesday, Jan. 10, 2017. General Electric Co. is scheduled to release earnings figures on January 20.


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A logo is displayed on a wind turbine used for training and research outside of the General Electric Co. (GE) energy plant in Greenville, South Carolina, U.S., on Tuesday, Jan. 10, 2017. General Electric Co. is scheduled to release earnings figures on January 20.

GE received a Wells notice Sept. 30 advising that the SEC may pursue a civil enforcement action over possible securities violations tied to an old insurance business, according to a company regulatory filing Tuesday. The agency has yet to decide whether to recommend action on issues related to GE’s power-equipment business that are also under investigation.

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The Wells notice reopens old wounds from a previously disclosed SEC investigation just as the company is trying to restart a turnaround upended by the coronavirus pandemic. In early 2018, about six months after Culp predecessor John Flannery took over from Jeffrey Immelt, GE disclosed a $6.2 billion charge related to an insurance portfolio of long-term care policies and said it would pay $15 billion over seven years to fill a shortfall in reserves.

“Most investors seem to believe that the government ultimately is likely to slap GE with a nominal fine. However, the matter could also result in more significant consequences,” John Inch, an analyst at Gordon Haskett, said in a note to clients.

“The largest risk(s) could pertain to GE’s possible future requirement to restate past financials and/or incur additional write-offs — potentially materially squeezing the trajectory for a return to higher future reported profitability,” Inch said.

GE Is Still Haunted by ‘$15 Billion Problem’: Brooke Sutherland

The

Topline

General Electric said in a filing Tuesday it’s been notified by the Securities and Exchange Commission that the agency may take civil action against the struggling industrial conglomerate for possible violations of securities laws following a two-year investigation.

Key Facts

According to the filing, SEC staff issued a Wells Notice to GE on September 30 in connection with possible violations of securities laws, specifically with respect to lending arm GE Capital’s accounting practices for certain insurance operations, as well as the relevant disclosures.

A Wells notice is not a formal allegation nor a finding of wrongdoing, but rather a notification from the SEC that the regulator is preparing to bring a civil enforcement action or administrative proceeding against a company; it gives the target of the probe an opportunity to respond before the SEC makes a final determination.

GE stock took a hit on Tuesday after the announcement, ending the day down 3.7%.

The SEC is still investigating GE for a slew of other alleged accounting malpractices, including its revenue recognition practices and handling of financial reporting related to long-term service agreements.

SEC staff has yet to recommend any action with respect to other matters under investigation, the filing notes.

GE says it is cooperating with the ongoing investigation.

Key Background

The Tuesday filing is the latest development in a mess of regulatory scrutiny that GE has faced since at least 2009, when the firm agreed to pay $50 million to settle SEC charges alleging it misled investors by reporting false and misleading results in its financial statements. The current investigation dates back to a January 2018 financial disclosure, in which GE revealed a $6.2 billion insurance loss dating back more than a decade–an event that triggered the SEC’s investigation by the

Adds detail on Wells notice

Oct 6 (Reuters)General Electric GE.N said on Tuesday it received a Wells notice, saying that the U.S. Securities and Exchange Commission staff is considering recommending a civil action against the company for possible violations of the securities laws.

The U.S. industrial conglomerate said the issues the regulator could pursue relate to the company’s run-off insurance operations – a portfolio of about 300,000 long-term care insurance policies that it holds in its GE Capital unit. (https://bit.ly/3iF3XGC)

In 2017, GE took a surprise $6.2 billion accounting charge and said it would need to set aside $15 billion for long-term care insurance payouts, one of the largest such amounts ever.

GE said the Wells notice is neither a formal allegation nor a finding of wrongdoing.

“It allows GE the opportunity to provide its perspective and to address the issues raised by the SEC staff before any decision is made by the SEC,” the company said.

(Reporting by Ankit Ajmera and Alwyn Scott; Editing by Shailesh Kuber and Anil D’Silva)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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