SEC upgrades probe into General Motors

[Guest Josh]

WASHINGTON - The Securities and Exchange Commission has upgraded its probe of retiree-benefits accounting at General Motors Corp., making the investigation formal and giving federal regulators the power to issue subpoenas and review records. Toni Simonetti, a spokeswoman for Detroit-based GM, declined to comment. DaimlerChrysler AG said Tuesday that it had received a subpoena in September in connection with accounting issues involving retiree benefits at General Motors. Such a subpoena could only have been issued if the SEC had voted to upgrade its probe of GM to a formal investigation. SEC spokesman John Nester declined to comment. When the SEC started its probe in October 2004, the agency queried six companies informally as part of an effort to determine whether companies were making aggressive assumptions with their accounting for retiree benefits in order to boost earnings. General Motors appears to be the only one of the six that has become the subject of a formal investigation. The other companies that have been queried informally by the SEC are Ford Motor Co., Delphi Corp., Boeing Co., Navistar International Corp., and Northwest Airlines Corp. The SEC probe in general is looking into whether companies have been making aggressive assumptions in their accounting for pension and retiree-health benefits in order to help their earnings. The issue arises because small changes in assumptions about factors such as the "discount rate" used to calculate future obligations can make a big difference with benefit plans that are large relative to the size of the company. For example, General Motors said in an annual report filed earlier this year that an increase of a quarter percentage point in the discount rate used to estimate future pension-plan obligations would lower its pretax pension expense for 2005 by $160 million, and would have reduced its total pension obligation by $2.2 billion as of the end of 2004.

[Guest Josh]

The other companies that have been queried informally by the SEC are Ford Motor Co., Delphi Corp., Boeing Co., Navistar International Corp., and Northwest Airlines Corp.

[post="34516"]<{POST_SNAPBACK}>[/post]

General Motors & Ford are hurting for cash. Delphi is Bankrupt. Boeing's earnings are in the dumps. Navistar I have no idea about. Northwest is Bankrupt. Where is the accountability?

See a trend here guys? Earnings were more than likely overstated, giving the impression to shareholders as well as Unions that the grass is green when it's not.

[FUTURE_OF_GM]

DaimlerChrysler AG said Tuesday that it had received a subpoena in September in connection with accounting issues involving retiree benefits at General Motors. Such a subpoena could only have been issued if the SEC had voted to upgrade its probe of GM to a formal investigation.

So we're going on a "he said, she said" basis for this story.

Well, I guess GM was showing some signs of recovery. So something had to be done to screw things up and keep the company down long enough to go bankrupt/be split up...

The great american witch hunt!!!! Destroy all of our businesses one way or another, especially when they get on top because WE LIKE to see failure.

[Newbiewar]

not exactly sure how the government could possibly want to send GM to court... thats like uncle sam putting a knife to his throat.... and i dont mean GM would win the court case, i mean gm would probably lose, or lose enough money that the company would go under... but... i would prefer that nothing about that company cares about shareholders and shareholders income... but i think that is all rick wagooner cares about is the shareholders

[Croc]

What is the timeframe for this? I can say that in the last 5 or so years there has been no indication that GM's grass has been green...in fact it's been kinda brown. It really could go either way, though. Accounting isn't exact by any means and involves vast amounts of estimation.

[Member55]

not exactly sure how the government could possibly want to send GM to court... thats like uncle sam putting a knife to his throat.... and i dont mean GM would win the court case, i mean gm would probably lose, or lose enough money that the company would go under...

but... i would prefer that nothing about that company cares about shareholders and shareholders income...

but i think that is all rick wagooner cares about is the shareholders

[post="34606"]<{POST_SNAPBACK}>[/post]

Who should the company care about? The only purpose of any company is to make money for it's shareholders(owners).

[sciguy_0504]

Who should the company care about? The only purpose of any company is to make money for it's shareholders(owners).

[post="34670"]<{POST_SNAPBACK}>[/post]

You mean real money, too, not overstated reports containing money that doesn't exist.

Boeing has been making a huge comback with its all-new 787 Dreamliner (more launch orders than any other commercial airplane in history) but I think it may still be having problems internally with management. I remember hearing about the company not being able to keep a CEO for too long for a number of reasons.

I hope, sincerely hope, that the SEC's probe turns up nothing against GM. Companies who have to endure something like that either don't last or are severely weak after all is said and done. Just look at Enron and Authur Anderson. Neither exist anymore. Granted, what they did is a hell of a lot worse than what GM allegedly did but a government investigation is still a government investigation.

[Member55]

So what would be the punishment if GM did over state earnings?

[post="34805"]<{POST_SNAPBACK}>[/post]

Wallstreet would do "the punishment" part. :blink:

[Newbiewar]

Who should the company care about? The only purpose of any company is to make money for it's shareholders(owners).

[post="34670"]<{POST_SNAPBACK}>[/post]

well... no one really does anything despite profits... but i mean come on... when someone creates a car and is only inspired by the profits they will see... cars like the camaro, chevelle, corvette etc... dont ever come out...

some automakers have passion in their cars and some just do it for money... I'd prefer if GM would have passion with their cars, and forget about the shareholders... if you really wanted to please the shareholders, get the stock to double by putting out great product... but spinning off companys like OnStar, Oldsmobile, Fidgidare, etc... just to please the shareholders, the bean counters, you piss off people like us, who love cars...

[FUTURE_OF_GM]

Wallstreet would do "the punishment" part.

As if they haven't already punished the company enough...

stock prices at 1/3 of what they used to be, shitty ratings, the constant 'kick in the teeth' media they generate.

You know, status quo for traditional american industry.

I think GM should move to China or Canada, screw this place... (SERIOUSLY) All in favor?

[bowtie_dude]

When I first read the title I thought, "Why is the Southeastern Conference investigating General Motors?" This is what happens when you grow up and go to school in a basketball state. :P

[Alpha]

Now, I see some of you understand how this works and some don't... Since GM is a publically held company...the shareholders elect a board of directors... This board of directors has the sole responsibility of protecting the interest of the shareholders and generting profits to benefit said shareholders. The Board of Directors have the primary job of choosing a CEO to represent them in the day to day operations of the company. The CEO is responsible to the BoD to generate the profits that they desire...the CEO is the one who assembles the rest of the company through the chain of command.

[SimonDavid]

I just had a crazy idea..

Seeing as Toyota can buy GM for loose change at current market prices

that means GE can buy GM for loose change as well

get GE Financial to run the pension fund and GMAC

get Neutron Jack to really sort out the UAW and the middle management timeservers

GE already has big centralised IT and engineering departments in India - big cost savings there..

and it stays American

[Member55]

If GE would do that their stock would go from $33 to $15 over night.

[andy82471]

If GE would do that their stock would go from $33 to $15 over night.

[post="35593"]<{POST_SNAPBACK}>[/post]

Yes, nobody in their right mind would even dare to touch GM. Reminds me of a news I saw about 2 weeks ago about a python trying to eat an alligator only to explode due to the huge size of the gator. That is what will happen to GE, Toyota, or anyone else trying to aquire GM.