Common Electrical agrees to pay $200 million SEC high quality for deceptive traders

Larry Culp, CEO, General Electric

Scott Mlyn | CNBC

The Securities and Exchange Commission has fined General Electric $200 million to settle charges for misleading investors regarding its power and insurance businesses.

The SEC said it found that GE misled investors in 2016 and 2017 about the source of profit in its GE Power business, one of the company’s core operations. The company also failed to fully inform investors about risks associated with GE Capital, the financial services arm of the company, between 2015 and 2017, the SEC said.

“Investors are entitled to an accurate picture of a company’s material operating results,” Stephanie Avakian, director of the SEC’s division of enforcement, said in a statement. “GE’s repeated disclosure failures across multiple businesses materially misled investors about how it was generating reported earnings and cash growth as well as latent risks in its insurance business.”

Shares of GE fell almost 75% in 2017 and 2018 as the disclosures became public, SEC said. The company settled the charges and agreed to pay the civil fine without admitting or denying the findings, the SEC said.

A representative for GE did not immediately return CNBC’s request for comment, but the company said in a financial filing after the announcement that “it is in the best interests of GE and its shareholders to resolve this matter and put it behind us on the basis announced today.”

“The SEC’s order makes no allegation that prior period financial statements were misstated,” the company noted. “This settlement does not require corrections or restatements of GE’s previously reported financial statements, and GE stands behind its financial reporting.”

GE’s shares fell by more than 1% Wednesday in after hours trading on the news after finishing the day up almost 4%.

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