The Securities and Exchange Commission has opened up an investigation of General Electric’s accounting practices in the wake of the conglomerate’s review of its insurance business.
GE said January 16 it conducted a review of its GE Capital insurance portfolio and decided to take a $6.2 billion after-tax charge in the fourth quarter of 2017. The company also expects to contribute $15 billion over the next seven years to shore up the portfolio’s reserves.
“I also want to note that we have been notified by the SEC that they’re investigating the process leading to the insurance reserve increase and the fourth quarter charge as well as GE’s revenue recognition and controls for long-term service agreements,” Chief Financial Officer Jamie Miller said on a conference call with investors.
“We are cooperating fully with the investigation, which is in very early stages,” Miller added.
The company said it will provide restated 2016 and 2017 financial results based on the new accounting.
The company is “still in the process of finalizing” the updates to the last two years of financial results, Miller said. She added that GE will release the restated information “shortly.”
GE shares were trading down less than 1 percent Wednesday, shedding premarket gains, after the probe was revealed.