General Electric Warns SEC May Take Action Regarding Company’s Accounting Problems
General Electric (NYSE: GE) said on Tuesday it had been informed that the Securities and Exchange Commission (SEC) was considering bringing an injunctive civil action against it for possible breaches of the security law.
The SEC has been investigating GE’s accounting practices since the company announced in January 2018 that it was taking on a massive load following a review of its insurance portfolio and a subsequent announcement in October 2018 of a goodwill impairment charge in its power unit.
GE in a regulatory filing said it had received a so-called “Wells Notice” from the SEC advising it that staff members can recommend action on GE’s disclosures related to its insurance operations. Staff have yet to make the final decision to recommend action, and Wells’ advice gives GE an opportunity to respond to the charges.
“GE disagrees with SEC staff regarding this recommendation and will provide a response through the Wells notification process,” the company said in the filing. “If the SEC allowed action against GE, it could seek an injunction against future violations of the provisions of federal securities laws, the imposition of civil monetary penalties and other actions within the authority of the Commission. “
The SEC investigation is one of many issues facing the industrial conglomerate as it tries to enact a turn around. The company, which has seen its shares fall 75% in the past five years, is trying to pay down debt and reverse the problems associated with years of market-leading acquisitions.
Coming in 2020, GE had hoped its massive aircraft unit would perform well and help fund its restructuring. But with Airlines companies cut costs and downsize their fleets due to the pandemic, this unit has become a deplete resources.
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