- Document: See Markopolos' report on General Electric here
"It's too big to fall." The mantra was repeated to satiety with Enron , an American energy company that in 2001 had to lower its blind, leaving 21,000 employees in the street, after discovering the fraud that hid their accounts: makeup their titanic losses with the activity of their own subsidiaries, with the endorsement of the then almighty Arthur Andersen , one of the five largest auditors in the world, which does not exist today.
General Electric is not Enron. It is actually much bigger. With more than 400,000 employees worldwide - about 4,000 in Spain -, a most diversified business, ranging from electrical infrastructure to the media, and that this week is on everyone's lips because of a controversial report.
Their actions bounced yesterday on Wall Street, but failed to overcome the 12% crash they suffered on Thursday, after analyst Harry Markopolos made public a devastating report of 175 pages, accusing the company of hiding behind false accounts a fraud even "greater than Enron", which would have been repeated since 1995 and would amount to 38,000 million dollars.
"My team has spent 7 months analyzing General Electric's accounting and we believe that the $ 38 billion fraud we have encountered is just the tip of the iceberg," Markopolos said after making his report public.
As soon as it saw the light, the titles of General Electric went into free fall, until closing with a decline of 11.3%. But how much power does a single analyst's report have?
In this case it has been the name of the signer that has dragged the investors. Markopolos was the one who in 1999 gave the alarm to the SEC, the Securities and Exchange Commission (the US CNMV), on the practices of today and famous investor Bernard Madoff.
At first they didn't pay much attention. Moreover, it has been almost 10 years since his complaint about Madoff's fraudulent Ponzi scheme was seriously investigated, ending him in jail, sentenced to 150 years, and emerging a pyramid scam of about 52,000 million.
Against this background the devastating report published by Markopolos on Thursday had an almost immediate effect on the New York Stock Exchange and General Electric's titles quickly deflated. The company immediately stepped out, accusing the analyst of deliberately seeking a fall in the value of its shares for its own interests.
“Mr. Markopolos openly acknowledges that he is compensated for unidentified hedge funds . These funds are financially motivated to try to generate short sales in company shares to create unnecessary volatility, ”General Electric said in a statement.
"The company has never met, spoken or contacted Markopolos and we are very disappointed that an individual without direct knowledge of General Electric chooses to present such serious and uncorroborated accusations," he continued. " General Electric operates with the highest levels of integrity and supports its financial reports, " he said.
Markopolos did not change his position yesterday after the reaction of the company. Although the shareholders seemed to do it. The CEO of General Electric (GE), Larry Culp, threw the rest and invested, according to Europa Press, almost $ 2 million to buy 252,200 shares of the multinational. Their titles traced above 8%.
The sales of Markopolos' book telling his journey in the Madoff case, No one would listen , also lived a second youth yesterday at Amazon.
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