America’s key financial ombudsman is considering legal action against General Electric for financial irregularities following a three-year probe into the company’s accounts.
The US Securities and Exchange Commission (SEC) has issued GE with a ‘Wells Notice’ warning that it intends to recommend civil proceedings for possible infringements of US securities laws.
The case is understood to focus on accounting practices across its infrastructure and industrial businesses as well as aviation, rail and healthcare.
GE, which manufactures everything from wind and gas turbines, ventilation systems, air conditioning to fridges, air-cooled heat exchangers and boiler management systems, has been under SEC investigation since January 2005.
The company - one of the world’s top ten manufacturing giants - confirmed it had received the notice issued in September 4. Under the terms of the notice GE will have the opportunity to persuade SEC officials to drop the action.
In a statement, GE financial communications director Russell Wilkerson said: “We are in preliminary discussions with the SEC staff concerning resolution of this matter. The Wells Notice is a common procedural step in an SEC investigation.
The Wells Notice relates to matters that we have already corrected and disclosed and with respect to which we have implemented remedial measures.” SEC refused to comment on the GE investigation.
GE second quarter results for 2008 showed earnings from ‘continuing operations’ at $5.4 billion (£3.08bn), down 4 percent from $5.6 billion (3.19bn) in the second quarter of 2007. Total revenue growth stood at 5 percent.
Commenting on performance, GE Chairman and CEO Jeff Immelt said: “Infrastructure continued to drive the Company’s performance with 24% segment profit growth. We are reviewing strategic options for the Consumer & Industrial (C&I) business. While we are exploring several options, we are now considering a spin-off to our shareholders as the best way to maximize value.”