GE shareholders not laughing

Share

• Yahoo! Buzz
• MySpace
• del.icio.us
• Reddit

• LinkedIn
• Fark
• StumbleUpon
• Newsvine

|

Recommend (9)

Print

Email

Alert

By MarketWatch

SAN FRANCISCO (MarketWatch) — As far as hoaxes go, it was hilarious. Unless you got caught on the wrong side of the trade.

According to a bogus press release sent out early Wednesday, General Electric /quotes/comstock/13*!ge (GE 19.94, -0.07, -0.36%)  CEO Jeffrey Immelt was purported to have informed the White House the company would be “gifting” a $3.2 billion federal tax refund to Uncle Sam on April 18, Tax Day, in a bid to “secure its position as a leader in corporate social responsibility.” Read full story about the hoax.

The tiny guerrilla team calling itself Yes Men claimed responsibility for the hoax, their latest in a series of stunts aimed at companies that espouse corporate citizenship while bulking up their bottom lines via generous tax loopholes. The hit on GE was especially timely given the controversy over the company’s true tax status stirred up by a recent New York Times report.

Reuters

GE’s Jeffrey Immelt listens to a reporter's question after an April 4 meeting with Japan's trade minister in Tokyo.

According to the newspaper, GE received a $3.2 billion tax credit on its 2010 income despite posting a $5.1 billion profit from its U.S. operations. GE officials claim nothing could be farther from the truth, though they haven’t been much help explaining what the truth is.

Meanwhile, Immelt makes an especially ripe target for these guys given his new role as an economic adviser to President Barack Obama, who, by the way, has called for narrowing the loopholes the titans of U.S. commerce use to avoid paying taxes. See First Take commentary on Immelt’s joining Team Obama .

But the hoax, dolled up as a very authentic-looking GE press release, fooled at least one news organization and then daisy-chained through other media outlets before getting yanked. But by then the damage was done.

GE shares fell 1.6% from their preopen high. Not a huge move, but enough to briefly trim GE’s market capitalization by nearly $3.5 billion.

How much of that was caused by the Yes Men? On a morning when most other companies in the Dow Jones Industrial Average were pretty flat, it’s tempting to think that at least some of GE’s pullback was the result of the hoax. We may never know, but there probably are several lawyers already looking into it, either on behalf of the company or its shareholders.

The episode is also cause for concern over at the Securities and Exchange Commission. One of that agency’s many tasks is to make sure people don’t manipulate share prices, and that includes issuing false statements about publicly traded companies.

It’s far from clear whether the SEC has the bandwidth to mount an investigation. But if you were hoodwinked into selling GE stock this morning, you’d appreciate it if the regulators at least gave the Yes Men a severe tongue lashing.

Of course, that would probably have about as much impact as saying it’s time to close those tax loopholes.

— Jim Jelter

/quotes/comstock/13*!ge General Electric Co (GE)

/marketstate/country/US The market is open7:53:00 pm The market is closed7:53:00 pm

$ 19.94

Change -0.07 -0.35%
Volume 40.05m Real time quotes

Add to portfolio GE Find a Broker Create alert

Add Comment › · Recommend (9) · Post:
Alert Email Print