General Electric Co fell the most in four months after a prominent whistle-blower working with a short-seller accused the company of masking financial problems. The company called the claims meritless.

Harry Markopolos, who had raised concerns over investment manager Bernie Madoff before his Ponzi scheme was exposed, said GE has understated liabilities in its insurance unit and has not properly accounted for its investment in Baker Hughes. In a report on Thursday, Markopolos said GE’s insurance unit will need to increase its reserves immediately by $18.5 billion in cash with an additional non-cash charge of $10.5 billion when new accounting rules take effect in 2021. He also alleged that GE isn’t properly accounting for its interest in Baker Hughes, an oil-and-gas services company.

The allegations complicate GE Chief Executive Officer Larry Culp’s efforts to regain investor trust following years of strategic missteps and stock declines at the company. Since taking the helm in October, he has sought to reduce risk in the finance operations, fix the power-equipment unit and stanch the flow of bad news that erased more than $200 billion from GE’s market value in the two-year period ending December 31.

The Boston-based manufacturer defended its accounting.

“GE operates at the highest level of integrity and stands behind its financial reporting,” the company said in an email. “We remain focussed on running our businesses every day, following the strategic path we have laid out.”

comment COMMENT NOW