Madoff whistleblower Harry Markopolos is probing GE on behalf of a hedge fund — but he won't say which one.
" Thursday. "It's a mid-sized, U.S. based hedge fund."
Markopolos said the alleged insurance fraud was "bigger than Enron and WorldCom combined." He claimed the company has committed $38 Billion in fraud, amounting to more than 40% of GE's market capitalization. Shares of GE fell 7% Thursday after the report. Markopolos's case centers around GE's long-term care insurance unit, which the company had to boost reserves for by $15 billion last year. By examining the filings of GE's counterparties in this business, he alleges that GE is hiding massive losses that will only increase as policy-holders grow older. He claims that GE has filed false statements to regulators on the unit, or eight other insurance regulators have done so.
Long-term care policies typically deal with end of life costs, like nursing homes or assisted living and are known as one of the more costly and unpredictable parts of the insurance market — especially as the average American lifespan rises.based on liabilities in its long-term care business, which is run by the company's financial services unit, GE Capital.
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