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UPDATE 1-General Electric adds to defense against charges of bogus accounting

Alwyn Scott

(Adds detail about GE's response, updates share price)

NEW YORK, Aug 19 (Reuters) - General Electric Co intensified its defense of accounting practices on Monday after investors questioned it about an unusual research report alleging GE failed to put aside money to cover $29 billion in potential insurance losses and improperly counted profit from subsidiary Baker Hughes.

The Boston-based conglomerate's new comments follow the release on Thursday of a 175-page research report https://www.gefraud.com that alleged there was fraud in GE's accounting, renewing concern about the company's financial position. GE has suffered a series of financial losses and taken more than $40 billion in charges and write-offs in recent years.

GE's shares fell as much as 15% after financial investigators Harry Markopolos and John McPherson published the report on Thursday. The shares recouped much of the decline on Friday. On Monday, GE shares were down 0.9% at $8.71 in afternoon trading.

Also on Monday, Steve Winoker, GE's investor relations chief, said in an email that the amount of GE's long-term care payouts would "play out over decades" and that GE uses "rigorous testing," "sound actuarial analysis" and follows "regulatory and accounting" rules to estimate future payouts.

Addressing the Baker Hughes questions, Winoker said accounting rules require GE to include the subsidiary's results in its earnings reports because it is the majority shareholder.

GE had disclosed in 2018 that its accounting is being investigated by the U.S. Securities and Exchange Commission and the Department of Justice.

Markopolos, best known for raising early alarms about Bernard Madoff, who was arrested in 2008 for running a Ponzi scheme, disclosed in the report that he stood to share in profits from a hedge fund that sold GE shares short before the report came out, a bet that the share price would fall.

GE said it offered the renewed defense on Monday in response to questions from investors about Markopolos' report, but did not say how many questions it received or characterize them.

"Given your follow-up questions, I wanted to lay out our perspective in a bit greater detail," Winoker wrote in the email to investors.

Winoker was a UBS analyst covering GE before being named to the current job in January.

In defending itself last week, GE Chief Executive Officer Larry Culp said Markopolos' report was "market manipulation - pure and simple" - a reference to his potential to profit from short-selling timed to the report. Reuters reported last week that short sales of GE shares rose by about $995 million in the month before Markopolos' report came out, according to S3 Partners, a New York financial analytics firm.

Culp and Leslie Seidman, chair of GE's audit committee, noted Markopolos had not consulted with GE before publishing the report. GE said Culp, Seidman and other GE directors and executives bought shares after the report came out last week.

(Reporting by Alwyn Scott in New York Editing by Matthew Lewis and Nick Zieminski)