GE: SEC Looking Into Comments During Credit Crisis

P

patchie

GE: SEC Looking Into Comments During Credit Crisis
By Tiernan Ray
The Securities & Exchange Commission is investigating comments made by General Electric (GE) management in September of 2008, when GE told the world its commercial paper market was doing fine, apparently in contrast to the dire things CEO Jeff Immelt was telling then Treasury Secretary Henry Paulson.

GE shares are off 46 cents, or 2.4%, at $19.04. The news comes as GE today reported Q1 earnings ahead of expectations and improving fundamentals in its GE Capital financials business.

Bloomberg’s Joshua Gallu and Jesse Westbrook report a GE spokesperson wrote in an email that “The SEC has requested information about our September 2008 statements” and that “We are fully cooperating with them and are entirely confident our disclosures were accurate.”

The latest development follows on a comment by the same GE spokesperson back in February saying Immelt did not recall having made comments to Paulson at the time about problem with GE’s commercial paper.

What Paulson writes in his book, “On the Brink,” regarding Monday, September 8, 2008, the day Fannie Mae (FNM) was taken into conservatorship and Lehman Brothers was teetering on the brink is the following:

Lehman’s plight wasn’t the only troubling news. Late Monday morning, General Electric CEO Jeff Immelt called to tell me that his company was having problems selling commercial paper. This stunned me. Although GE’s giant financial unit, GE Capital, had faltered along with the rest of the industry, the company as a whole was an American business icon–one of the few with a triple-A credit rating. If GE could’t sell its paper, what did that mean for other U.S. companies?

And a week later, after Lehman was bankrupt:

If I had any doubts that we were about to enter a new, ugly phase of the crisis, they were erased when General Electric CEO Jeff Immelt stopped by to see me a little before 6:00 pm. We spoke privately in my office. I’d known Jeff for years and admired the cool, unflappable demeanor he had displayed as CEO of the biggest, most prestigious company in America. Jeff was following up on a phone call from the week before. “Jeff,” I remember saying, “we have got to put out this fire.”

As the authors note, however, GE on Sept. 14 told investors in a memo that GE’s corporate debt programs remained “robust.”
 
So last August it was accounting fraud and now it is false and misleading representation of the business finances.

What has become of the ethics we expect from our nations corporate giants? Maybe it is a banking thing as GE's ethics has spun down tremendously since it moved from an industrial based company to a service based banking company.
 
"Philosopher Emmanuel Kant demanded that ethical principles pass muster as universal, to be applied by all people in all circumstances…the Categorical Imperative.

But the fact is that no ethical system or principle is going to work all the time. The point of ethics, and professional ethicists often lose sight of this, is to do the right thing, not to construct the perfect formula for doing the right thing.

It is not only acceptable, it is necessary to use a variety of ethical approaches to solve certain problems.

In real life, situations come up that just don't fit neatly into the existing formulas.

Recognize that, and you will have an easier time dealing with them."
 
Immelt and GE are on Obama's economic committee and GE is backed by Buffett. if the accounting fraud scandal is any indication how soft the SEC will be on this that was it.

The bigger the company the bigger the fraud and thus the harsher the penalties. When a company with this type market cap manipulates the value, more people get hurt than a company with a $50 Million market cap. These CEO's are paid for their company's performance and should be legally addressed based on such pay and their legal actions.

Obama distinguishes different types of CEO's based on their reputation and credibility. those honors come with an expectation. A dirty cop is treated more harshly than a street thug committing the same crime. Big Name corporations should be held to a higher standard when their crimes have the greater impacts.
 
Easy defence - GE survived therefore its funding was robust.
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I agree. This is a case of semantics for the lawyers to lawyer.

If Ge had disclosed their opinions about commercial paper, in essence it could be as detrimental as yelling fire in a crowded theater.
 
The SEC is wasting limited tax dollars for these useless complaints like comments etc..these are not important to investigate..

The SEC doesn't have the power to investigate or enforce the more serious financial fraud in wall street. Congress and the court system took all the powers away from the SEC so the SEC is toothless.




Quote from patchie:

GE: SEC Looking Into Comments During Credit Crisis
By Tiernan Ray
The Securities & Exchange Commission is investigating comments made by General Electric (GE) management in September of 2008, when GE told the world its commercial paper market was doing fine, apparently in contrast to the dire things CEO Jeff Immelt was telling then Treasury Secretary Henry Paulson.

GE shares are off 46 cents, or 2.4%, at $19.04. The news comes as GE today reported Q1 earnings ahead of expectations and improving fundamentals in its GE Capital financials business.

Bloomberg’s Joshua Gallu and Jesse Westbrook report a GE spokesperson wrote in an email that “The SEC has requested information about our September 2008 statements” and that “We are fully cooperating with them and are entirely confident our disclosures were accurate.”

The latest development follows on a comment by the same GE spokesperson back in February saying Immelt did not recall having made comments to Paulson at the time about problem with GE’s commercial paper.

What Paulson writes in his book, “On the Brink,” regarding Monday, September 8, 2008, the day Fannie Mae (FNM) was taken into conservatorship and Lehman Brothers was teetering on the brink is the following:

Lehman’s plight wasn’t the only troubling news. Late Monday morning, General Electric CEO Jeff Immelt called to tell me that his company was having problems selling commercial paper. This stunned me. Although GE’s giant financial unit, GE Capital, had faltered along with the rest of the industry, the company as a whole was an American business icon–one of the few with a triple-A credit rating. If GE could’t sell its paper, what did that mean for other U.S. companies?

And a week later, after Lehman was bankrupt:

If I had any doubts that we were about to enter a new, ugly phase of the crisis, they were erased when General Electric CEO Jeff Immelt stopped by to see me a little before 6:00 pm. We spoke privately in my office. I’d known Jeff for years and admired the cool, unflappable demeanor he had displayed as CEO of the biggest, most prestigious company in America. Jeff was following up on a phone call from the week before. “Jeff,” I remember saying, “we have got to put out this fire.”

As the authors note, however, GE on Sept. 14 told investors in a memo that GE’s corporate debt programs remained “robust.”
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