NEW YORK (Reuters) - General Electric Co GE.N faces potential legal action by the U.S. Department of Justice over allegations that its GE Capital unit and now-defunct WMC Mortgage Corp unit violated U.S. law in connection with subprime mortgages, according to a regulatory filing on Friday.

FILE PHOTO: The General Electric logo is pictured on the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France, November 21, 2016. REUTERS/Stephane Mahe/File Photo

The DOJ “is likely to assert” violation of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) “in connection with WMC’s origination and sale of subprime mortgage loans in 2006 and 2007,” the filing said.

“WMC and GE Capital will explore whether an acceptable settlement of this matter can be reached. In the event that an acceptable settlement cannot be reached, DOJ may initiate legal proceedings against WMC and GE Capital. WMC and GE Capital believe they would have defenses to any such lawsuit,” GE’s 10-K filing added.

GE said the warning about the potential action stems from a DOJ investigation and outcomes of investigations of other financial firms. GE said two years ago that the DOJ had issued subpoenas to WMC and GE Capital as part of an industry-wide investigation.

WMC, now a defunct subprime lending unit, was sold by GE in 2007.

GE declined to elaborate beyond the language in the filing.

The Boston-based conglomerate also said in the filing that it added 18,000 employees to its worldwide workforce last year, a 6.1 percent increase that comes as it tries to cut costs to raise profits.

GE said it had 313,000 employees at year-end, including 106,000 in the United States.

The increase stemmed from acquisitions made last year, including Baker Hughes BHGE.N and LM Wind Power, and was "offset by divestitures and restructuring," GE spokeswoman Jennifer Erickson said.

“The headcount figures at the end of 2017 do not reflect all of the restructuring that we’ve announced previously,” she added. “Some of the restructuring projects take time to execute, so we’ll continue to reduce headcount as we go forward.”

GE said it had the ability to repatriate approximately $10 billion of non-U.S. cash without incremental federal income tax because of recent U.S. tax law changes.

Last month, GE posted nearly a $10 billion loss for the fourth quarter of 2017.

Analysts said on Friday that they had expected GE’s headcount to fall as the company cuts costs, and were looking for updates to the WMC investigation.