General Electric Agrees to Pay $200 Million Penalty for Disclosure
Violations
FOR IMMEDIATE RELEASE 2020-312Washington D.C., Dec. 9, 2020 —The Securities and Exchange Commission today announced that General Electric Co. (GE) has agreed to pay a $200 million penalty to settle charges for disclosure failures in its power and insurance businesses. In 2017 and 2018, GE’s stock price fell almost 75\% as challenges in its power and insurance businesses were disclosed to the public. According to the SEC’s order, GE misled investors by describing its GE 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 finds that GE failed to tell investors that its reported increase in current industrial cash collections was coming at the expense of cash in future years and came primarily from internal receivable sales between GE Power and GE’s financial services business, GE Capital. In addition, the order finds that from 2015 to 2017, GE lowered projected costs for claims against its long-term care insurance portfolio and failed to inform investors of the corresponding uncertainties resulting from lower estimates of future insurance liabilities at a time of rising costs from long-term health insurance claims.“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.”“Public companies must take great care to follow disclosure laws for the benefit of their investors,” said John T. Dugan, Associate Director of Enforcement in the SEC’s Boston Regional Office. “Companies like GE, with complexities such as interdivisional transactions and reliance on estimates of future costs and revenues, must ensure that the information they provide to investors is not misleading.”The SEC’s order finds 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 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.The SEC’s ongoing investigation is being conducted by Michael Vito, Michael Franck, Patrick Noone, Mark Albers, Celia Moore, Rua Kelly, Colin Forbes, Kerry Vasta, Ryan Murphy, and David D’Addio of the SEC’s Boston Regional Office, and supervised by John Dugan of the Boston Regional Office and Matthew Jacques, Chief Accountant, Division of Enforcement. 版权声明：所有瑞恩资本Ryanben Capital的原创文章，转载须联系授权，并在文首/文末注明来源、作者、微信ID，否则瑞恩将向其追究法律责任。部分文章推送时未能与原作者或公众号平台取得联系。若涉及版权问题，敬请原作者联系我们。 更多香港IPO上市资讯：www.ryanbencapital.com
