General Electric (GE) - Get Report rose Friday after CEO Larry Culp purchased $2 million worth of shares in the company following reports that its accounting tactics were targeted by the whistleblower who helped bring down Bernie Madoff's Ponzi scheme.
Securities and Exchange Commission filings from late Thursday indicate Culp purchased 252,000 GE shares at $7.93 each Thursday as the stock plunged following a Wall Street Journal report that outlined allegations from Harry Markopolos, an accounting expert who flagged issues surrounding Bernie Madoff's investment fraud. Markopolos called GE a "bankruptcy waiting to happen" and said he found that its insurance unit would need an $18.5 billion boost to its reserves. He also told that paper that other accounting issues, including in its oil and gas business, would amount to around $38 billion.
Markopolos is working with an undisclosed hedge fund that has an ongoing short position in GE shares, meaning they're betting against them in the near and long term.
"GE will always take any allegation of financial misconduct seriously. But this is market manipulation -- pure and simple," Culp said in a statement Thursday. "Mr. Markopolos's report contains false statements of fact and these claims could have been corrected if he had checked them with GE before publishing the report."
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GE shares rose 9.7% on Friday to close at $8.79 following Thursday's 11.3% plunge (the biggest in more than 11 years).
GE's power division raised concerns last year when the company said a $22 billion charge related to acquisitions that it booked over the three months ending in October 2018 was being probed by both the Securities and Exchange Commission and the U.S. Department of Justice.
"GE stands behind its financials. We operate to the highest-level of integrity in our financial reporting and we have clearly laid out our financial obligations in great detail," the company said in a statement to TheStreet. "We remain focused on running our business every day and following the strategic path we have laid out."
"We will not be distracted by this type of meritless, misguided and self-serving speculation and neither should anyone in the investor community," the statement added.