The U.S. Securities and Exchange Commission (hereinafter “SEC”) has announced that General Electric Co., one of the worldwide largest conglomerates (hereinafter “GE”), has agreed to pay a USD 200 million penalty to settle charges for disclosure failures in its power and insurance businesses.

According to the SEC’s statement, GE would have misled investors by describing its GE power profits without explaining that the profits generated in the years 2016 and 2017 stemmed from reductions in prior cost estimates. In addition, the SEC order states that from 2015 to 2017, GE would have lowered projected costs for claims against its long-term care insurance portfolio and that it would have failed to inform investors of the corresponding uncertainties. In 2017 and 2018, GE suffered an almost 75% drop in its market capitalisation, as challenges in its power and insurance businesses were disclosed to the public.

The SEC’s concluded that GE would have violated the antifraud, the reporting, the accounting as well as the disclosure controls provisions of the U.S. securities laws. The SEC stated that GE had agreed to pay a USD 200 million penalty and to report certain accounting and disclosure controls in its insurance and power businesses during a one-year period without admitting or denying the SEC’s findings.

More information: https://www.sec.gov/news/press-release/2020-312