NEW YORK – A Securities and Exchange Commission (search) probe into General Electric Co. (GE) and its use of hedge accounting for derivatives was upgraded to a formal investigation in August, but GE delayed disclosure until its third-quarter financial statements last week.
In January the SEC's Boston district office began an informal investigation into GE's accounting for derivatives used to hedge risks, requesting that GE and its GE Capital division voluntarily provide documents and information.
But in its quarterly financial filing on October 24, GE said SEC staff in August advised the company that the commission had elevated the probe to a formal investigation, which means SEC staff are authorized to subpoena witnesses and documents.
GE officials could not be reached immediately for comment. GE, in the filing, said it believed the upgrade is "a common step in the process in such matters."
The company said it has continued to voluntarily provide documents and information to the SEC Staff and "we intend to continue to cooperate fully with its investigation."
GE in May restated its earnings from 2001 through the first quarter of 2005 after an internal audit found that its accounting for currency and interest rate derivatives did not comply with accounting standards.
The company at the time said the restatement resulted in a total non-cash increase of $381 million, or less than six tenths of 1 percent of total earnings, for that period.
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