GE to pay $200mn penalty for misleading investors

11 December, 2020 12:00 AM printer

WASHINGTON: General Electric has agreed to pay a US$200 million penalty to settle charges for misleading investors over how it was generating earnings in its power and insurance businesses, the US Securities and Exchange Commission said on Wednesday.

GE’s shares were down 1.2 per cent at US$11.25 in post-market trade following the news, report agencies.

Securities regulators opened a probe into the company’s accounting practices following a 2017 surprise accounting charge of US$6.2 billion by the company, which said it would need to set aside US$15 billion for long-term care insurance payouts at the time.

The inquiry, which initially focused on long-term service agreements for maintenance of power plants, jet engines and other industrial equipment, was later expanded to include GE’s review of its insurance business.

As part of the settlement, GE has also agreed to report to the SEC for a one-year period about compliance related to its power business and GE Capital’s run-off insurance operations.

A GE representative said the settlement has brought the SEC’s investigation to a close, and no corrections or revisions to its financial statements are required.

The representative said it was in the best interests of GE and its shareholders to settle, adding the conglomerate has taken a number of steps to enhance its disclosures and internal controls since the time period covered by the investigation.

Most of GE’s insurance operations were spun off in Genworth Financial more than a decade ago, but it retained some of the legacy long-term care policies and also reinsures policies written by other insurers.