GE agrees to pay $200M penalty for SEC disclosure violations

Business

The GE logo is pictured at the General Electric plant of Montoir-de-Bretagne, Britany, on September 15, 2020. (Photo by Sebastien SALOM-GOMIS / AFP) (Photo by SEBASTIEN SALOM-GOMIS/AFP via Getty Images)

CHICAGO (NewsNation Now) — The Securities and Exchange Commission announced Wednesday General Electric has agreed to pay a $200 million penalty to settle charges for disclosure failures in its power and insurance businesses.

According to the SEC, GE misled investors by describing its power profits without explaining that one-quarter of profits in 2016 and nearly half in the first three quarters of 2017 stemmed from reductions in its prior cost estimates. 

The order also found GE failed to tell investors that its reported increase in industrial cash in future years and came primarily from internal receivable sales between GE Power and GE’s financial services business, GE Capital, according to the SEC.

“Investors are entitled to an accurate picture of a company’s material operating results,” said Stephanie Avakian, Director of the Division of Enforcement.  “GE’s repeated disclosure failures across multiple businesses materially misled investors about how it was generating reported earnings and cash growth as well as latent risks in its insurance business.”

The SEC order found that GE violated the antifraud, reporting, disclosure controls, and accounting controls provisions of the securities laws. 

Without admitting or denying the order’s findings, GE has agreed to cease and desist from future violations of the charged provisions, pay a $200 million penalty, and report for a one-year period to the SEC regarding certain accounting and disclosure controls in its insurance and power businesses, according to the commission.

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