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General Electric: The books were cooked

General Electric has cut an “embarrassing deal” with the Securities and Exchange Commission to settle charges of bogus accounting, said The Economist. The agency charged the massive conglomerate with bending “accounting rules beyond the breaking point,” to avoid reporting disappointing earnings in 2002 and 2003; the dodgy accounting boosted earnings by $780 million. GE, “which neither admitted nor denied the charges but promised to do better in future,” paid $50 million to settle the matter. The agreement “raises worrying questions” about GE’s record of hitting its earnings targets with eerie precision and consistency.

“We may have witnessed a turning point for the company,” said Katie Benner in Fortune. The settlement is the clearest sign yet that CEO Jeffrey Immelt is trying to change GE’s “culture of managed earnings.” Under former CEO Jack Welch, GE frequently tinkered with the assets of the company’s finance unit, GE Capital, “to help the company meet Wall Street earnings targets.” Federal regulators will be watching GE closely to ensure that smoke-and-mirrors accounting, and the reliable earnings that it produced, are a thing of the past.

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Mortgages: Freddie Mac’s profit shocker

Ailing mortgage giant Freddie Mac surprised Wall Street this week by reporting its first quarterly profit in two years, said John Spence in Marketwatch.com. Largely as a result of accounting changes, the company posted a profit of $768 million, up from a loss of $821 million for last year’s comparable quarter. Freddie Mac, which was taken over by the government last year after suffering staggering subprime-mortgage losses, “said it won’t have to hit up the government for more financial assistance, at least for now.”

Utilities: Dynegy gets rid of a suitor

Texas electrical utility Dynegy has sold eight power plants to LS Power Group, said Jim Polson in Bloomberg.com. LS Power, a New York–based electricity producer, will pay about $1 billion in cash for the plants and surrender 245 million Dynegy shares it had acquired as part of a contemplated takeover attempt. Analysts said LS Power was avoiding a headache by buying the plants rather than all of Dynegy, which is burdened with high costs and heavy debt.

Advertising: Publicis hooks Razorfish

French advertising giant Publicis has agreed to buy Razorfish, Microsoft’s digital-marketing unit, for $530 million, said Marketwatch.com. Razorfish, whose clients include Best Buy, Ford Motor, and McDonald’s, designs and executes digital-marketing campaigns for corporate clients. As part of the deal, Microsoft agreed to buy digital-marketing services from its former subsidiary for at least the next five years. After the purchase is complete, Publicis will generate one-quarter of its revenue from digital communications.

Investigations: Madoff associate pleads guilty

Investigators trying to unravel the case of confessed Ponzi schemer Bernard Madoff will have some help, now that Frank DiPascali, Madoff’s chief financial officer, has agreed to plead guilty, said Robert Gearty in the New York Daily News. DiPascali, “Madoff’s right-hand man,” could help investigators understand how Madoff’s $65 billion fraud went undetected for more than 20 years—and where some of the money might be hidden. Authorities say up to 10 people could eventually be charged in the case.