Following the close, GE climbed 3% in late trading after the company said Culp had purchased about $2 million in shares amid the rout.
Former CEO Jack Welch became a household name as the company flourished, peaking in 2000 with a market value of $594 billion.
GE dismissed Markopolos's allegations as baseless and defended its accounting.
John Hempton, co-founder of the Sydney, Australia-based Bronte Capital hedge fund, wrote in a blog post https://brontecapital.blogspot.com/2019/08/the-flat-out-silly-markopolos-ge-report.html on Thursday that GE's 14.7% average profit margin in recent years was in line with the returns of its industrial peers, not "too good to be true" as Markopolos alleges.
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"I encourage you to hold them accountable", he said. "They were getting investors behind them. That's not going away.and it's probably going to make this company file for bankruptcy", Markopolos toldCNBC.
Markopolos said he had chose to give the hedge fund a first look at his report, in return for compensation, in order to pay himself and his team for their work.
In total, the 125-report paints a grim picture of GE's financials, but there according to the disclosures, there is additional information that was not disclosed in the public version of the report, which was instead forwarded to law enforcement agencies.
Markopolos is far from the only one critical of GE's accounting.
The potential issues highlighted by Markopolos are focused on GE's long-term care policies, which are used to cover the expense of a nursing home or assisted living.
To calculate the $18.5 billion figure, Markopolos compared GE's reserves for its long-term care insurance portfolio to those of Prudential Financial Inc.
"Mr. Markopolos's report contains false statements of fact and these claims could have been corrected if he had checked them with GE before publishing the report".
Markopolos' report out Thursday concluded GE's accounting missteps total $38 billion, or about 40% of its market value.
"The fact that he wrote a 170-page paper but never talked to company officials goes to show that he is not interested in accurate financial analysis, but exclusively in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit", Culp said of Markopolos.
GE disagrees. "GE will always take any allegation of financial misconduct seriously".
Markopolos recently moved from the Boston area to Puerto Rico and got a chance to put his suspicions to the test. "Their books are a mess", he said.
Culp blasted the report as "market manipulation - pure and simple", in a statement.
"The fact that he wrote a 170-page paper but never talked to company officials goes to show that he is not interested in accurate financial analysis, but exclusively in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit", Culp said in a statement to Markets Insider.
Druckenmiller's Duquesne, which owned 6.19 million shares as of June 30, had been shorting the stock on and off beforehand because the investor said he didn't believe in previous management.
For now, Cohan remains unconvinced that GE has put its problems behind it.
When Culp said 2019 would be a "reset year", this could not have been what he had in mind. While Hempton said "GE is a deeply problematic company", he recommended that investors ignore the report. In particular, he cited Culp's decision to buy almost 332,000 shares in the company on Monday, a purchase valued at $3 million.
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