Summary
General Electric Company (GE) announced on August 4, 2009, a settlement with the Securities and Exchange Commission (SEC) to resolve an ongoing investigation. The settlement involves a civil penalty of $50 million and requires GE to comply with federal securities laws. GE neither admits nor denies the SEC's allegations. This resolution pertains to four specific accounting matters that occurred between 2002 and 2003, related to hedging programs, derivative accounting, spare parts accounting in the aviation engine business, and year-end transactions in the Rail business. Importantly, GE has previously corrected its financial statements for the impact of these items in prior SEC filings between May 2005 and February 2008, meaning no further restatements are required. The company cooperated extensively with the SEC investigation, incurring approximately $200 million in external legal and accounting expenses. GE views this settlement as a positive step to put the matter behind the company and its shareholders, having also implemented internal control enhancements.
Key Highlights
- 1GE reached a settlement with the SEC to close an ongoing investigation.
- 2The settlement requires GE to pay a $50 million civil penalty.
- 3The investigation concerned four specific accounting matters from 2002-2003.
- 4GE previously corrected its financial statements for these matters between May 2005 and February 2008, so no further restatements are needed.
- 5GE cooperated fully with the SEC, incurring approximately $200 million in related external costs.
- 6The company neither admits nor denies the SEC's allegations.
- 7GE has implemented remedial actions and internal control enhancements.