The Associated Press published a story based on a fake email press release that said General Electric would respond to criticism over the amount of taxes it avoids by repaying its entire $3.2 billion tax refund for 2010 to the U.S. Treasury Department. Both the press release and AP's story said GE would repay its tax refund on April 18, that the company would phase out its tax havens over five years and start providing one job in the U.S. for every new job it creates overseas. The hoax release quoted GE CEO Jeffrey Immelt as saying, “All seven of our foreign tax havens are entirely legal ... but Americans have made it clear that they deplore laws that enable tax avoidance. While we owe it to our shareholders to use every legal loophole to maximize returns -- we also owe something to the American people. We didn't write the laws that let us legally avoid paying taxes. Congress did. But we benefit from those laws, and now we'd like to share those benefits. We are proud to be giving something back to America, and we are proud to set an example for all industry to follow.” President Obama appointed Immelt as chairman of his outside panel of economic advisers on January 21, 2011. AP failed to verify the information in the release and withdrew its story 35 minutes after its publication. Two groups took responsibility for the hoax: the Yes Men and U.S. Uncut, saying they did it to raise awareness of U.S. corporate tax policy.
In its rush to be first, AP didn’t even bother to verify what was so obviously a bogus story. That’s a major media fail, but of course the biggest fail of all is the corporate tax policy which allows companies like GE to dodge its obligation to America to begin with. I guess after they got busted for defrauding American taxpayers back in 1985 they just found a legal way to do it.
Meanwhile, the business press is not amused:
GE shares fell 1.6% from their preopen high. Not a huge move, but enough to briefly trim GE’s market capitalization by nearly $3.5 billion.
How much of that was caused by the Yes Men? On a morning when most other companies in the Dow Jones Industrial Average were pretty flat, it’s tempting to think that at least some of GE’s pullback was the result of the hoax. We may never know, but there probably are several lawyers already looking into it, either on behalf of the company or its shareholders.
The episode is also cause for concern over at the Securities and Exchange Commission. One of that agency’s many tasks is to make sure people don’t manipulate share prices, and that includes issuing false statements about publicly traded companies.
It’s far from clear whether the SEC has the bandwidth to mount an investigation. But if you were hoodwinked into selling GE stock this morning, you’d appreciate it if the regulators at least gave the Yes Men a severe tongue lashing.
Really? There are people who would sell their shares of a stock when they learned a company was going to pay its fair share of taxes, phase out overseas tax havens, and provide as many jobs in the U.S. as it does overseas?
Seriously? That would cause investors to flee a stock? I’m thinking ... no. I'm thinking MarketWatch writer Jim Jelter has fabricated a scenario he imagines existed. We'll never know because he never quotes any actual angry, duped investors. But it’s a nice little bit of hippie punching, is it not? Can’t let those young kids muck around in the marketplace, got to keep ‘em in their place. The free hand of the market demands it.