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Aug 23, 2019

Who is Harry Markopolos' mystery GE short seller? No one is talking

The General Electric logo appears above a trading post on the floor of the New York Stock Exchange

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When Harry Markopolos dropped his bombshell report skewering General Electric Co., he revealed that he was working with a short seller to profit from the stock’s decline. Eight days later, that firm’s identity remains a mystery.

Markopolos has offered few details about his partner, saying only that it’s a midsize hedge fund based on the East Coast — and one not normally known for shorting. “I promised confidentiality,” the accounting examiner said on CNBC.

Off-the-record conversations with a number of players in the short-seller community haven’t turned up much intel either. Most people seem to be at a loss.

That has only added to the intrigue and the questions being floated in the hallways of hedge funds, investment banks and GE itself. Why is the short seller staying in the shadows? Is the firm worried about legal risks? Does it want to avoid publicly attacking an iconic company? Is it less confident than Markopolos?

Of course, Wall Street being Wall Street, the name could slip at any moment, even if there’s a nondisclosure agreement involved.

And there could be a lot riding on that identity. If it turns out to be a well-respected name, that could reinvigorate a short trade that had knocked more than $7 billion from GE’s market value through Thursday. On Aug. 15, the day of the report, GE plunged 11 per cent.

If it’s a no-name player, well, that may just help support Chief Executive Officer Larry Culp’s contention that the report was “market manipulation, pure and simple.”

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