SEC fines GE $200 million

Company accused of hiding earnings information

General Electric Co. was fined $200 million for allegedly misleading investors about the finances of its power unit and an insurance business, as a multi-year U.S. Securities and Exchange Commission probe culminated in one of the regulator’s largest-ever settlements tied to accounting disclosures.

The industrial giant failed to tell shareholders a sizable part of its power division’s earnings in 2016 and 2017 stemmed from reductions in prior cost estimates, the SEC said in a statement Wednesday. GE also lowered projected claim costs in its longterm care insurance portfolio from 2015 to 2017 — but failed to disclose corresponding uncertainties on future liabilities, the SEC said.

The accord resolves a major source of uncertainty for GE, but the agreement comes at a price: The civil penalty is double the amount that the company set aside in connection with the SEC probe. GE disclosed the probe after it shocked investors in early 2018 by taking a $6.2 billion charge stemming from the run-off insurance portfolio. The SEC later expanded the investigation to cover a $22 billion goodwill impairment charge at GE’S power unit.

“We have concluded 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 Boston-based company said in a regulatory filing.

GE didn’t admit or deny the SEC’S findings. The company won’t be required to restate any previous financial reports.

The shares fell 1.2 percent to $11.25 after the close of regular trading in New York.

GE has said the Justice

Department is also investigating the 2018 power-unit charge.

As part of the SEC settlement, GE agreed to report to the agency for a year on compliance issues related to its power business and run-off insurance operations.

The pact with the SEC removes a major item from the to-do list of GE Chief Executive Officer Larry Culp, who has been trying to turn around the maker of jet engines, power equipment and medical scanners.

The probes had bolstered critics of GE’S history of opaque accounting, which Culp has sought to assuage with pledges to improve transparency and enhance investor disclosures. He has also overhauled the executive team and brought in several company outsiders.