very much. >>> shares of ge, meantime, down on this report released by madoff whistleblower harry markopoloss down to the lowest level in a few months of the dom chu has details. >> 7.5, 8% on the downside if you look at what's being alleged by markopolos, he is saying that this team has found one of the biggest insurance frauds he has uncovered, bigger than what he says is the size of enron and worldcom he says this is the ninth insurance fraud case this the past nine years. bigger than enron and worldcom combined the analyst community fell for ge's accounting tricks by priding themselves and coming one methods to allocate ge's corporate overhead he says the long-term business are under reserve and liabilities will persist and cost more down the line. ge has responded to these allegations by saying that, again, we have never met, spoken to, or had contact with this person we cannot comment on the detailed content of the report the allegations are entirely false and misleading it's widely known and the wsj reported that he works and is compensated by unnamed hedge funds. i point this out, on

harry markopolos is a forensic accountant.n its insurance business. general electric has countered those claims, calling them "meritless, misguided and self—serving speculation." nevertheless, ge shares fell by 15% at one point on thursday and it is a clear sign that investors are worried. they are worried, quite possibly because of the source of the information. he has a track record of highlighting financial misdeeds, and most recently was the whistle—blower who uncovered bernie madoff‘s $65 billion ponzi scheme, the largest case of financial fraud in american history. the report also comes at a time where ge's profitability has taken a massive hit. last year, it was dropped from the dow 100 and has had to lay off thousands of employees. just to clarify, the london market is still shut. technical difficulties, apparently, according to the lsa. some slightly mixed m essa 9 es to the lsa. some slightly mixed messages coming out over trading and what is going on. joining us is mouhammed choukeir, chief investment officer at kle

harry markopolos has claimed that general electric is hiding an accounting scandal, sending its shareshussain has more from new york. this man causes of a forensic —— forensic accountant. his hiding losses in his insurance business. general electric has countered those games: the meritless, misguided and self—serving, speculation. nevertheless, the shares fell by 15% at one point on thursday and it's a clear sign that investors are worried. and they are worried quite possibly because of the source of information. as a track record of highlighting financial misdeeds, most recently he was the whistleblower who uncovered a $65 million scheme. the largest case of financial fraud million scheme. the largest case of financialfraud in million scheme. the largest case of financial fraud in american million scheme. the largest case of financialfraud in american history. this comes at a time where the profitability has ta ken this comes at a time where the profitability has taken a massive hit. thus jed profitability has taken a massive hit. thusjed was dropped from the dow 100 and had to lay of

harry markopolos has a track record of highlighting financial misdeeds.lower who uncovered bernie madoff‘s $65 billion ‘ponzi' scheme, the largest case of financial fraud scheme, the largest case of financialfraud in scheme, the largest case of financial fraud in american scheme, the largest case of financialfraud in american history. his report also comes at a time where ge's profitability has taken a hit. last year it was dropped from the dow 100 and has had to lay off thousands of employees. in other business news making headlines, shares of walmart jumping business news making headlines, shares of walmartjumping after reported second—quarter earnings which topped expectations and raise its outlook for the year. the well‘s biggest retailer says american consumers are in, quote, relatively good shape even as the recession concerns continue good shape even as the recession concerns continue to rise. alibaba has reported better than expected profitability. it said those results we re profitability. it said those results were boosted by growth in its cloud

the report coming from this man, harry markopolos.he same whistleblower who uncovered the massive $65 billion fraud pulled off by bernie madoff, who is now serving a 150-year sentence. the head of ge is coming out swinging, using both his words and his wallet. to jackie deangelis on i guess which side the analysts are leaning toward. jackie: it's mixed right now. you've got some bulls on the street and you've got bears on the street when it comes to ge, but those shares as you said are rebounding today, after that sharp 11% drop yesterday, which was jarring for the market. that was actually the biggest drop in 11 years for ge stock. on claims that there's massive accounting fraud and that ge might be filing for chapter 11 bankruptcy soon. so in response to those allegations, ceo larry culp, he bought nearly $2 million of shares yesterday and he sent this in a statement. quote, he wrote a 170-page paper but never talked to company officials goes to show that he's not interested in accurate financial analysis but solely in generating do

that's madoff's whistleblower and financial investigator harry markopolos said about general electric'snting in a scathing 168 report that was out this morning. it asserts t at theounting fraud amounts to 40% of the conglomerate's markeue and that the company has masked the financial problems. the report focuses largely on ge's long-term care liability, saying it is a bigger liability than the company is letting on. >> we went through the statutory filings for long term care and pulled the regulatory filing for the year 2013 to 2018, and we saw all of the losses falling os to ge's b and we saw how much premium dollars they were taking in and what their loss ratios were. ge is losing $5.27 for each dollar ofum income they're taking in. the losses are sustainable and growing at exponential rate. >> reporter: it is work noting that markopolos is working with a hedge fund that is voting ge's hedge priceill go down. the ceo fired back calling it market manipulation. that it contains misstatements of fact and he could have corrected them if he had checked with ge before publishing the report.

this comes yesterday when an accountant, harry markopolos, published a 175 page report that accused gedollar accounting fraud. that is who you're seeing on the screen. he said ge is hiding losses, they changed their accounting format every two to four years making it difficult, to make any historical comparisons. the caveat though, important caveat is that this accountant and his team were being paid by a third party hedge fund. the hedge fund that shorted fe. so they benefit when the stock drops which is what we saw yesterday. several analysts are supporting on wall street supporting ge. including citron research. they focus on short selling ideas. they put out a note attacking march cop poelous say that is sad day for activists in the short selling community. his sheriff's mentality is disingenuous and does not pass the smell test. he said the statements are reckless. of the citron published research were never paid by a third party to publish research. they wanted to point out that fact. highlight fe, in is difference between fraud and aggressive accounting -- ge. ge bent the accoun

most of his latest purchase came after harry markopolos yesterday called the conglomerate a bigger fraudpan passing china as the largest foreign holder of u.s. debt in june japan holds 1$1.1 trillion in u.s. treasuries. china has been slowing its purchases with some speculating beijing could use the action as a tactic in the trade war with the u.s. >>> and bridgewater founder ray dalio says there's a 40% chance of a u.s. recession before the 2020 election. and in an interview with cnbc, the hedge fund manager said bigger interest rate cuts are needed from the fed. >> i think you will see greater interest rate cuts as you start to see the world economy starting to slow down. i think you're seeing that being led now by the bonds in other words, long-term interest rates are falling faster than short-term interest rates. and that is inverting the yield curve. when that happens, it means that cash is more attractive than bonds. and as a result you tend to see then the movement towards cash and the slowing up of lending. so we have a situation in which there's a lot of pressure to cut rates. >

that's what madoff whistleblower harry markopolos said about general electric's accounting in a scathing new 175-page report out this morning shares are dropping on this news, down about 13% markopolos joined us earlier last hour. take a listen. >> ge is losing $5.27 for each dollar of premium income they are taking in. those losses are unsustainable and they're growing at an ex exponential rate for 2016, they grew at a 16% rate they're growing exponentially and will make this company probably file for bankruptcy >> ge responding saying they haven't been contacted by mr. markopolos another report was created to help with ge shares. you can see the stock down about 11% right now. certainly lower. carl, we know that markopolos is, you know, in fact working for an undisclosed hedge fund. we pressed him to find out who that was and what that financial situation looked like. a hedge fund that is looking to short the stock, but also coming out and saying that, you know, he's working on behalf of the american public. nonetheless, really kind of going into detail and raising a lot of questions a

. >> remember, this started from i guess a very detailed research report by harry markopolos, the samet called the s.e.c.'s attention to madoff's fraud, the madoff ponzi scheme. s.e.c. did nothing about it. markopolos became sort of a cult hero for investors after that. couple of things i want to point out. you know, past performance does not, you know, equal future performance. that's basic rule of investing. just because something -- a stock did well in the past doesn't mean it will keep doing well. things change. same goes for research reports and predictions from analysts. you know, bill ackerman was very good on certain aspects of the financial crisis. he wasn't very good on some other things, as you know, particularly herbalife. you could say that about a lot of people that cover this. so remember that just because markopolos called one thing really well, that doesn't mean he's not a smart guy, he doesn't make some valid points. that doesn't mean the shot of what he's saying is accurate. we should also point out one other thing. yes, madoff ripped off billions and billions from p

whistleblower and short seller harry markopolos made allegations. >> the numbers are missing they reportop line and bottom line and nothing in between like research and selling, costs, research and development costs including cash flow. they don't provide working capital, the only company in the industry that doesn't provide working capital. in fact, ge's working capital is minus 20.3 billion, current ratio at 20.67 if you research the word ratio in the current annual report it doesn't appear world com and enron lasted about four months once their account frauds were exposed. we will see how ge does. >> ge hitting back on "closing bell". i spoke exclusively with board member and audit committee shar leslie seidman who said there's no basis. >> this report today set a dangerous precedent where somebody can just say things and then potentially benefit monetarily significantly from the decline in the stock of the company. that is wrong. i really think that we need to investigate the motives for this and -- because here we have mr. markopolos and whatever this unnamed hedge fund is probably

investigator harry markopolos issued a dire warning in a new report and said ge is heading for bankruptcy madoff's ponzi scheme and claims ge is engaging in $38 billion of accounting fraud and alleges the company is hiding major financial losses. the report declared ge the next enron. in a statement ge calls the claims unsubstantiated and meritless and the company says it, quote, operates at the highest level of integrity and stands behind its financial reports. >> they're having a meeting right now. >> yeah. actually said it is bigger than enron and worldcom combined. that is how big he said it was. >> call it meritless and baseless but somebody is meeting about what to do. >> the ge ceo went a and bought 250,000 shares of his company mething going on.ng so there is a little questionable how this investigator was paid on this project. he released the report to a hedge fund before it was public and then made money off the trading that hedge fund did. it doesn't smell right to me. >> they also think he is after the whistle blower money. >> there are a lot of questions still out there. >>>

anonymous hedge fund commissioned harry mark markopolos. march kopelousos markopolos say they participated in $30 billion of fraud that dates back to the 1990s that goes back to jack welch. he says a fraud bigger than worldcom enron combined. stocks shares are up 11% today, why? in response to the allegations, ceo larry culp bought $2 million of shares yesterday, he said this in a statement, quote, ge will always take any allegation of financial misconduct seriously. this is market manipulation pure and simple. mr. markopolos contains false statements of fact. andrew left of citron research he published a note saying it was the sad day for the activist short selling community when march markopolos issued his report. everybody will be looking into this. melissa: no doubt, jackie, thank you. connell: on booming economy president trump warning voters a 2020 win for the democrats would throw u.s. prosperity, quoting now, down the tubes. melissa: sounds like trump. sounds like what he would say. connell: that was definitely a quote. melissa: yea

bernie madoff whistleblower harry markopolos, i guess we will play it straight here, told nbc ge hasem. >> put a lot of people in prison over the years and i'm continuing that trend. i need to get paid i have a family to support anybody who signs those financials as a ceo or cfo is culpable. >> you are coming after the current management team right now? >> on march 7th they had an insurance teach in, they could have come in they could have shown you the insurance deals and what the losses were in dollars and cents, they did not. it would have been easy to do. they did not i did. world con and enron lasted about four months before they were exposed. >> ge responded issuing a statement saying, ge will always take any allegation of financial miskk misconduct seriously, but it is market man nip lags. it contains false statements of fact and these claims could have been corrected if he had checked them with ge before publishing thereport. joining us, cnbc contributor william kohn, a special correspondent for "vanity fair". let's start on the cnbc news line with nick heymann who in a note

. >> reporter: i mean it's 175 pages of details harry markop markopolos we have been getting it wrongpages. the crux of this report deals with allegations that harry markop wil markopolos he is alleging a fraud 38 billion over gem electric. a lot of that is tied mostly to its long-term care in its insurance businesses talking about this idea that they may need to boost reserves there in order to account for that business and some of the potential liables down the line that it may have he alleges that this is the biggest insurance fraud that he's seen bicker than enron and worldcom combined. he also says that of the 29 billion in new reserves that general electric needs, per his report, his allegations, that 18.5 billion requires cash immediately. he also goes on to list a number of other reasons why there are accounting issues at general electric now, we should point out, ge did respond to a comment from cnbc with regard to the allegations being made in this report. in that ge says, we have never met, spoken to, or had contact with this person while we cannot comment on the detailed c