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GE's accounting is being investigated by the Justice Department

GE revealed on Tuesday that the federal government is investigating a $ 22 billion accounting write-down of the slumping power…

GE revealed on Tuesday that the federal government is investigating a $ 22 billion accounting write-down of the slumping power division. The huge fee reflects the deterioration of companies GE acquired.

After GE announced the compulsory charge on October 1, the SEC expanded an ongoing investigation to include the write-down, the company said in an application. GE added that the Justice Department is also investigating the fee and other issues that the SEC is looking at.

GE said that it provides the Justice Department and SEC with documents and other information requested.

“We are collaborating with the SEC and DOJ as they continue their work on these issues,” said Jamie Miller, GE’s CFO in a conference call.

The GE (GE) share went back to a nine-year low on the news. Earlier this day, GE shares increased after the company announced a deeper than expected dividend.

SEC refused to comment on the extension GE survey. The Ministry of Justice did not respond immediately to an investigation.

“There will be a cloud that overlaps the company until it gets clean,” said Jeff Windau, an analyst at Edward Jones, covering GE.

The news comes just a few weeks after GE unexpectedly expelled John Flannery as CEO and replaced him with Larry Culp, the first outsider CEO of the company’s 1

26-year history.

The SEC and the Justice Department often work close together when investigating potential financial crimes. If the SEC finds something “problematic”, it usually corresponds with the prosecutor’s investigator, according to Tony Phillips, a criminal defense attorney at McKool Smith.

“In general, DOJ is interested when it looks like there is an effort to hide the firm’s true health,” said Phillips, who previously served as Attorney General for the Justice Department’s General Integrity Department.

If the Department of Justice finds misconduct, Phillips said that prosecutors could consider a large number of charges against former and current GE employees, including fraud, incorrect statements and conspiracy.

The investigations deepen GE’s legal problems. The company faces at least three different requests from the SEC and two from the Ministry of Justice.

“It’s definitely unusual. I do not know if companies I cover that have so many surveys going on,” said Windau.

GE announced in January that the SEC examined its accounting tactics and a $ 6.2 billion insurance loss that was discouraged by shareholders.

SEC filed GE with accounting fraud and claimed that the company used “overly aggressive accounting” to make false and misleading statements to investors. GE paid $ 50 million to determine fees, but neither acknowledged nor denied any errors.

The Ministry of Justice is also investigating WMC, a subprime mortgage loan that GE closed in 2007.


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