SEC May File Civil Actions Against GE On Securities Violations

September 6, 2008 4:27 p.m. EST

Fairfield, CT (AHN) - General Electric Co. disclosed Friday that the Securities and Exchange Commission may recommend for the filing of a civil complaint against the company related to an investigation on accounting changes it made three years ago.

Bloomberg reported that a Wells notice, a common procedural step in an SEC investigation, was issued by the SEC to give GE the chance to explain to the SEC before the agency files the suit. GE and SEC are in preliminary settlement talks.

GE said it disagrees with the agency's recommendation and is cooperating with the SEC on ongoing probe. SEC has the option to impose fines, issue an order barring future violations or other relief within the Commission's mandate.

SEC investigated GE's finance, aviation, health care, energy and locomotive units on accounting errors, which was traced in January 2005.

As GE made adjustments, changing its reported profits in 2002, subsequent disclosures affected earnings disclosures, which prompted GE to restate net income twice.

GE said that it disclosed the changes in previously filed SEC reports, corrected financial statements and implemented remedial measures.

GE tapped law firms WilmerHale and Cravath, Swaine & Moore to help in the SEC and audit issues.