The whistleblower who called out Bernard Madoff’s Ponzi scheme has accused General Electric of wide-scale fraud in a move that has sent the conglomerate’s share price into a tailspin.
In a report titled General Electric, a Bigger Fraud Than Enron, investigator Harry Markopolos claims GE is engaging in accounting fraud worth $38bn. He said GE is heading for bankruptcy and is hiding $29bn in long-term care losses.
“GE’s $38bn in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds,” he writes, referencing two of the largest corporate accounting scandals in history.
After a year long investigation for an unidentified hedge fund, Markopolos writes he has discovered “an Enronesque business approach that has left GE on the verge of insolvency”. Enron, a Texas-based energy group, filed for bankruptcy in 2001, brought down by a massive accountancy scandal.
This report is “going to make this company probably file for bankruptcy”, Markopolos told CNBC’s Squawk on the Street. “WorldCom and Enron lasted about four months … We’ll see how GE does.”
In a statement GE said it “stands behind its financials” and operates to the “highest level of integrity” in its financial reporting. “We remain focused on running our business every day and … will not be distracted by this type of meritless, misguided and self-serving speculation.”
GE’s share price sank close to 15% after the report was released.
General Electric is already under investigation by the Securities and Exchange Commission (SEC), the US’s top financial watchdog, and the justice department over accounting irregularities related to its insurance and power divisions.
Once the world’s most valuable company, GE has struggled in recent years. Former CEO and chairman John Flannery was abruptly removed last year after only a year on the job and replaced by former Lawrence Culp, former CEO of the Danaher conglomerate.
On Thursday Culp dismissed Markopolos’s report. “GE will always take any allegation of financial misconduct seriously. But this is market manipulation – pure and simple,” he said.
Markopolos is best known for his role as the whistleblower who warned the SEC about Madoff’s Ponzi scheme. Madoff was jailed for 150-years in 2009 after pleading guilty to swindling investors out of $65bn in savings.

That's why we nibble and build up positions over time!

I don't have to tell you guys, but the problem with buying the dip, is that you don't know how low it will go. Added to Wellington at beginning of the month, my normal purchasing time.

Memories fade. Sometimes we remember what we want to remember.
My own memory says that PIMCO funds were generally expensive, though I believe that there was a period of time when they actually got cheap. I think at one time Bill Gross said something about making fees more reasonable. But that's my fuzzy memory, and it's harder to find records of such pronouncements than it is to dig up old filings:
PIMIX current expenses (July 31, 2019 summary prospectus):
Management Fees: 0.50%
12b-1 Fees: N/A
Other Expenses: 0.55% (all of which is interest expense, per footnote)
Fee Waiver: N/A
Total ER: 1.05%
PIMIX expenses 10 years ago (July 31, 2009 prospectus):
Management Fees: 0.45%
12b-1 Fees: N/A
Other Expenses: 0.61% ("reflect interest expense", per footnote)
Expense Reduction (0.05%)
Total ER: 1.01%

@MFO Members: As a holder of Pimco Income Fund I admit the expensive is high, but what concerns me is the size of the fund $103.3 Billion. I beliece it's size has hurt performance over the last couple of years despite Dan Ivascyn's claim that it hasn't