[arbuge]

It seems to me he is being paid by hedge funds to come up with research that supports their short positions. I see no evidence anywhere that he's shorting them using his own personal funds and even that would not necessarily give me any additional confidence he's right.

With your logic one might also claim that promoters of pump-and-dump schemes should be commended for having skin in the game.

[leroy_masochist]

> I see no evidence anywhere that he's shorting them using his own personal funds

From page one of Markopolos' presentation:

> [...] members of the Company are personally in possession of securities, derivatives, and/or other financial instruments of, and correlating to, GE, which may generate profits should the price of GE securities decrease

To be clear: I think Markopolos is on to something here, and the presentation does a pretty good job of showing how GE is sitting on some really really bad news for its investors. But yeah, he's definitely shorting GE personally in addition to whatever he's getting from the sponsor.

And there's nothing wrong with that! This is the whole point of having public securities markets!

[jazzyjackson]

Why would I pick a company to short, and then pay someone to bad mouth that company?

Seems like a lot less risk to pay analysts to find possible frauds, and then short them while disclosing what they found.

The Netflix series "Dirty Money" introduced me to this concept, episode 3 "Drug Short" covers the analysts who called out Valeant Pharmaceuticals and took a pay day for their hard work through shorting the stock. Really I found it inspirational :)

[eganist]

> It seems to me he is being paid by hedge funds to come up with research that supports their short positions.

Regardless of whether this is true, should they successfully collect a reward, it would validate the research on merits.

[slg]

Not if this research is what causes the stock to drop and is what allows them to collect a reward. Then the merits of the accusations doesn't actually matter and they don't have to true for the people shorting the stock to profit from releasing them.

I have no idea if these accusations are true, but the accuser's short position on the stock has zero positive bearing on the validity of the accusations.

[eganist]

> Not if this research is what causes the stock to drop and is what allows them to collect a reward.

I don't understand the causative relationship you're asserting between a drop in value and a whistleblower award that's only granted after an enforcement action. How would a drop in stock value result in a whistleblower award?

[slg]

Sorry, I misunderstood your comment then. I though you were using "reward" generally. A financial windfall from shorting a stock and then releasing bad news about the stock is a "monetary reward" that doesn't depend on the merit of the accusations. I didn't realize you were speaking specifically about a "whistleblower reward" which wouldn't be awarded until well in the future after the report had been verified.

[shkkmo]

What are you talking about? There is zero whistleblowing going on here. This is an outside investigative report funded by a hedge fund. The only link to whistleblowing is the investigators biography.

[elliekelly]

From the disclosures section of the report:

> Prior to the initial distribution of this Report on August 15, 2019, the Company also submitted this Report to the U.S. Securities and Exchange Commission’s Whistleblower Program and the U.S. Department of Justice’s FIRREA Whistleblower Program. Both or either of those submissions may generate profits for the Company independent of the financial performance of GE and/or the securities, derivatives, and other financial instruments of, and/or relating to, GE.

I don't know how the DOJ program works but SEC Whistleblowers can be awarded 10-30% of the money recovered as a result of their information.

SEC FAQ here: https://www.sec.gov/whistleblower/frequently-asked-questions

[xbmcuser]

I think he came out with the report as SEC had already started investigating GE. If he had not come out with his report he might not have been able to trade in GE stock as he would have had insider information and could be dinged for insider trading. After putting the information out in the public he can short all he wants.

[fastball]

How can you be a whistleblower if you use entirely public information?

[driverdan]

Time is money. They claim they've been investigating this for a year. That means they have a lot invested into it.