Whistleblower Stops the Music
An old Wall Street character is making a return with sweeping accusations that could sink one of the stock markets most stalwart companies. General Electric is accused of swindling investors by a man with a pretty impressive record for draining swamps.
Investors keen on their stock market lore will know Harry Markopolos. He’s the man who exposed the biggest Ponzi scheme in history, run by notorious crook, Bernie Madoff. Once hailed as a Wall Street wizard, Bernie offered clients an investing strategy so complex and secret that it was indistinguishable from magic. The returns of his fund moved up at a 45-degree angle. In finance, there’s no such thing. Bernie hid in plain sight until Markopolos cracked his case.
This stock market detective has kept a low profile in recent years, but on Friday, he rocked the markets! In his firing line was General Electric (GE), a struggling industrial conglomerate making turbines, healthcare equipment, and the like. Founded by Thomas Edison himself in 1892, many investors have a soft spot for the old giant, rooting for its transformation into the modern age. However, the firm now faces damning finger-pointing from Markopolos in a 170-page report. He accuses the company of the same fraud as Enron, dubbing it “GEnron…”
Innocent until proven guilty, however. The CEO has personally invested over two million dollars into GE in an act of defiance, lambasting Harry Markopolos for “market manipulation.” He may have a point. Markopolos single-handedly took GE stock 12% lower while at the same time being paid by a hedge fund. The unnamed fund is betting against General Electric, with Markopolos set to enjoy a sizable chunk of the profits if it pays off. Coincidence?
If the claims turn out to be accurate, then rest in peace General Electric. For now, let’s leave both GE and Markopolos in the hands of the higher-ups while we wait for this whole thing to blow over.
