GE Is Still Haunted by a '$15 Billion Problem'
An SEC notice of possible penalties over the company's handling of an insurance business is a reminder of the many troublesome legacy issues that remain.
Amid a turnaround, past problem spots need resolving, too.
Photographer: Goh Seng Chong/BloombergTry as it might, General Electric Co. can’t escape its past. The latest reminder came on Tuesday when the embattled industrial giant said it had received a “Wells notice” from staff at the Securities and Exchange Commission — a warning that the regulator may pursue civil action over the potential violation of securities laws.
At issue is GE’s handling of a legacy insurance business and its disclosure in 2018 of a surprise $15 billion shortfall in reserves that were supposedly stress-tested each year. As Vertical Research analyst Jeff Sprague put it when the massive deficiency was first announced, “It is hard to imagine a $15 billion problem materialized in the course of the year."