UPDATE 3-GE names accounting, turnaround experts to board

(Adds Warren Buffett's comments, share movement)

Feb 26 (Reuters) - General Electric Co nominated top aviation and industrial executives and an accounting expert to its board on Monday, as it seeks to restructure its business and restore investors' confidence in one of the largest U.S. industrial conglomerates.

The Boston-based multinational, which racked up a $10 billion loss in the fourth quarter, was the worst-performing stock on the Dow Jones Industrial Average last year. It fell another 3.5 percent on Monday.

GE said on Friday that it was facing potential legal action by the U.S. Department of Justice in connection with subprime mortgages. It also said a restatement of its 2016 and 2017 results would likely lower reported earnings.

Those problems along with long-term care contracts, which resulted in a $6 billion charge on its insurance businesses last year, drew criticism from billionaire U.S. investor Warren Buffett in an interview on CNBC on Monday.

"I would say the accounting at GE has not been a model at all in recent years, but you can make mistakes," said Buffett, who exited his stake in GE last year.

"Long-term care has probably been the biggest single element of mis-reserving in insurance throughout the industry ... but I was staggered by the amount of it (at GE)."

One of the new directors named on Monday was Leslie Seidman, a former JPMorgan Vice President and chairman of the Financial Accounting Standards Board nicknamed "Loophole Leslie" by opponents for her bank-friendly approach to regulation after the 2008 financial crash.

The other two were Thomas Horton, who oversaw the restructuring and merger of American Airlines with US Airways, and Lawrence Culp Jr., who as former CEO of Danaher Corp transformed the company from a manufacturer into a science and technology firm.


Chief Executive John Flannery has promised to revamp GE into a leaner company by exiting several businesses and the company has already announced a series of job cuts to lower costs that have dented profits and disappointed investors.

Horton, also a director at Walmart, was chief financial officer at AT&T Inc when it combined with fellow telecoms Cingular and SBC in 2005, and is currently at the forefront of merger negotiations between chipmakers Broadcom Ltd and Qualcomm Inc.

"We are adding proven world-class expertise in capital allocation, aviation, accounting and financial reporting," GE Lead Director Jack Brennan said.

Analysts, however, said the nominations to the board - to be cut to 12 directors from a previous 18 and voted on by shareholders in April - would do little to distract from the problems accumulating for GE.

"This remains a 'liability story'," JP Morgan analyst Stephen Tusa said. "We see weak core free cash flow as too structurally challenged to de-lever the balance sheet, leaving the company prone to risks around further contingent liabilities, and/or capital markets volatility."

GE said nine of the company's directors will stand for re-election including major shareholder Trian Fund Management's Edward Garden, who was appointed to GE's board in October.

GE's stock fell 45 percent last year and is down another 17 percent so far in 2018. (Writing by Patrick Graham; editing by Saumyadeb Chakrabarty)