8-KOther Events

GENERAL ELECTRIC CO 8-K Report, Corporate Update (Aug 4, 2009)

Filed August 4, 2009For Securities:GE

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.

Frequently Asked Questions

This 8-K filing announces that General Electric Company (GE) has reached a settlement with the Securities and Exchange Commission (SEC) to resolve an ongoing investigation. This settlement includes a $50 million civil penalty for GE.

No, GE has already corrected its prior period financial statements for the impact of each of these four accounting matters in previous SEC filings made between May 2005 and February 2008. Therefore, no further corrections or restatements are required.

Beyond the $50 million civil penalty, GE incurred approximately $200 million in external legal and accounting expenses related to its cooperation with the SEC investigation and its own internal reviews.

The SEC investigation covered four accounting matters from 2002-2003: the application of SFAS 133 to GE's commercial paper hedging program and certain swap derivatives, a change in accounting for spare parts profits in the commercial aviation engine business, and certain year-end transactions in the Rail business.