Please ensure Javascript is enabled for purposes of website accessibility

General Electric Warns SEC Could Take Action Over Company's Accounting Issues

By Lou Whiteman – Oct 6, 2020 at 4:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company disagrees with the regulator and intends to continue talks.

General Electric (GE 5.35%) said Tuesday it has been advised the Securities and Exchange Commission (SEC) is considering bringing a civil injunctive action against it for possible violations of security law.

The SEC has been investigating GE's accounting practices since the company's January 2018 announcement that it was taking a massive charge following a review of its insurance portfolio, and a later October 2018 announcement of a goodwill-impairment charge in its power unit.

A stock chart.

Image source: Getty Images.

GE in a regulatory filing said that it was issued a so-called "Wells notice" by the SEC advising it that staffers may recommend action on GE's disclosures related to its insurance operations. The staff has not yet made a final decision to recommend action, and the Wells notice provides GE with an opportunity to respond to the accusations.

"GE disagrees with the SEC staff with respect to this recommendation and will provide a response through the Wells notice process," the company said in the filing. "If the SEC were to authorize an action against GE, it could seek an injunction against future violations of provisions of the federal securities laws, the imposition of civil monetary penalties, and other relief within the Commission's authority."

The SEC investigation is one of many issues facing the industrial conglomerate as it tries to enact a turnaround. The company, which has seen its shares fall 75% over the past five years, is trying to pay down its debt and undo issues related to years of market-topping acquisitions.

Coming into 2020, GE had hoped its massive aviation unit would perform well and help fund its restructuring. But with airlines cutting costs and shrinking their fleets due to the pandemic, that unit has turned into a drain on resources.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
$67.00 (5.35%) $3.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.