GE shares plunge as investigation widens

Shares in General Electric crashed by more than 10% following investor concerns about the turnaround prospects at the once-mighty industrial giant.

GE admitted that US civil and criminal authorities had widened investigations into accounting practices at the firm.

It also reported worse than expected third quarter results.

It said that it would drastically cut its payment to shareholders to pay down debt and will restructure its struggling power business.

Larry Culp, GE’s new chief executive and the third boss in two years, said the company’s aviation and healthcare divisions – its two most profitable units – remain strong and he is confident that the business can improve.

“We know what we need to do. Now is the time to execute,” he said.

However, shareholders dumped stock in the 126-year-old conglomerate to send its share price down to the lowest level since 2009.

GE missed forecasts with a third quarter loss of $22.8bn after it was forced to take a $22bn writedown on its power division.

Revenues fell down 4% to $29.6bn.

The Securities and Exchange Commission has expanded its investigation into GE’s accounting practices to include the $22bn charge.

GE’s chief financial officer Jamie Miller said: “The Department of Justice (DoJ) is also investigating this charge and the other areas we have previously reported are part of the SEC’s investigation.

“We are cooperating with the SEC and DoJ as they continue their work on these matters.”

The company, founded in 1892, expanded from its roots as Thomas Edison’s lighting company to once rank as the most valuable corporation in America.

Its profile has shrunk in recent years, as the firm sold off many of its divisions. Several of those sales remain in the works.