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GE is under fire for accounting fraud, and its hiring trends suggest more trouble

6 months ago by Jon Marino in Markets

A rare and dramatic scene unfolded this week as a Wall Street veteran accused one of the best-known and (once, at least) most highly-regarded American corporate institutions of a vast fraud conspiracy.

Harry Markopolos' accusation that General Electric ($NYSE:GE) has, as far back as ex-CEO Jack Welch's tenure, engaged in accounting fraud was met with an aggressive denial by GE - and the company's shares have see-sawed to extremes on an already turbulent public market. 

All General Electric job postings have plummetd since the beginning of the year - falling more than 19% to date. This data set tracks back to January 2018, and highlights a rise that capitulated around the turn of the new year. All the while GE shares were plummeting - the drop from Markopolos' comments erased any gains the stock had made in 2019, in a year when shares were already trailing market benchmarks. Over the last five years, the company's stock has lost roughly two-thirds of its value. 

The Markopolos report also points to Baker Hughes ($NYSE:BHGE), as having accounting irregularities. GE bought into Baker Hughes in 2016, only to hastily reverse course, and chart new plans to exit the oil and gas business, which has maintained a separate ticker on public markets. Just like GE's job postings drop, Baker Hughes' postings have also decreased more than 19% this year. Both companies showed ramped-up job posting trajectory throughout 2018, and declines this year. 

GE, for its part, released a statement and has a phalanx of directors, PR professionals and analysts taking its side of the fight. The company called Markopolos conflicted, and his claims "unsubstantiated". Whether or not Markopolos is proven right, GE's alternative data reflects a legacy company struggling to find growth. 

About the Data: 

Thinknum tracks companies using information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales. 

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Jon Marino

Jon Marino is Thinknum's finance editor, covering the impacts of alternative data on public companies and investors. Prior to joining Thinknum, Jon worked in the ...

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