Arcam AB fka AMAVF

[charlie T colton]

GE’s Culp wagers serious money that Markopolos’ fraud accusation is wrong

At marketwatch.com - Opinion: GE’s Culp wagers serious money that Markopolos’ fraud accusation is wrong - Published: Aug 31, 2019

Twenty-four million bucks ain’t hay.

Not even for a highly paid honcho who made $15 million and change last year.

But that’s about how much of his own money that General Electric GE, +1.73% Chief Executive Officer Larry Culp has riding on his company’s stock — and how much he’s wagering that Harry Markopolos, the famous fraud hunter, is wrong.

Culp and GE find themselves in a brutal smackdown with Markopolos, the financial gumshoe who called out Bernie Madoff’s fraud years before it broke.

Markopolos last week called GE a “fraud” and “the next Enron,” and said it is “one recession away from Chapter 11.”

‘Bear raiders’

So-called “bear raiders” seek to profit by driving down a stock price. They typically operate by borrowing stock in a company and selling it, expecting to buy it back later at a lower price once the stock has fallen.

Almost nobody on Wall Street likes bear raiders. They always make an easy target. Optimism, not pessimism, is considered as American as apple pie.

The arguments against Markopolos don’t hold much water. Why shouldn’t he get paid for his work? It takes a lot of experience and diligence to produce a 175-page detailed study of a major corporation’s accounts. If he’s right about GE, he should make money from it.

The internet is full of people who get paid for their own work, and then expect everyone else to work for free.

What if he’s spreading false rumors, say critics? Well, yes. It’s always a risk on markets. But in this case it seems unlikely because it would be very unwise. It would destroy Markopolos’ reputation if, and when, it came out. And it would put him at risk of civil and potentially criminal sanctions. Spreading false information to manipulate a stock for profit is against the law.

“To the extent that you knowingly put out false information to distort the trade in shares to your own benefit, that could violate provisions of the 1934 Securities Exchange Act, and potentially violate criminal laws,” says veteran securities lawyer Ernest Stern, a partner at Culhane Meadows law firm in Atlanta. “You could be pursued by the Securities and Exchange Commission and the Department of Justice,” he adds.