The US Securities and Exchange Commission has sent a Wells notice to General Electric over the company’s possible violations of securities laws.
The United States Securities and Exchange Commission has sent a Wells notice to American conglomerate General Electric. Essentially, that means the agency wants to pursue an enforcement action against GE over possible breach of securities policies.
A September 30 filing has stated that the SEC intends to take action against how GE handles its insurance portfolio. Previously, the industrial conglomerate has mentioned that the SEC has looked into their multi-billion insurance losses. Meanwhile, shares for the company dropped by four percent on Tuesday trading, CNN Business reports.
The SEC warned GE late last month that it plans to bring an enforcement action over the company's handling of an insurance portfolio, a filing revealed. GE had previously said the SEC was investigating staggering insurance losses of $6.2 billion. https://t.co/vwBfdcDNnW
— CNN Business (@CNNBusiness) October 6, 2020
The Wells notice from the SEC does not necessarily mean any charges will take place. It only serves as a warning to the company before the SEC officially decides any further actions. Moreover, it gives GE the chance to respond to the points brought by the agency, including the way GE dealt with their insurance operations.
CNBC reports that the points raised by the SEC pertain to GE’s insurance operations. Last 2018, GE had reported that it lost $6.2 billion worth of long-term insurance. At the time, GE warned that it would set aside $15 billion to dedicate for insurance money, which caused the commission to look into it and the process of doing it.
Particularly, the SEC looks into the legacy part of the GE Capital, the industrial company’s finance division.
While the Well’s notice remains a warning, possible consequences could include civil fines and another judicial order for any potential breaking of securities policies in the future. However, specific enforcement actions remain “unknown at this time,” GE noted.
Meanwhile, GE further said that it disagrees with the SEC staff regarding the suggestion of responding through the Wells notice process, CNN reports.
Furthermore, the agency probes other alleged malpractices of the company.