The Five Dumbest Things on Wall Street This Week

4. Yellow Peril

Speaking of posted, we discovered a previously unnamed co-conspirator in WorldCom's accounting fraud: Post-it Notes. Some data from the investigative committee's report:

• Fourth Quarter of 1999: "The $239 million [international line cost accrual release] was entered in WorldCom's general ledger ... The only support recorded for the entry was '$239,000,000,' written on a Post-it Note and attached to a printout of the entry."
• Third Quarter of 2001: "Myers gave Sethi a Post-it Note that said 'Assume $742 million.' Later, Myers and Sethi had a conversation confirming that $742 million identified on the Post-it Note was the line cost capitalization entry for the quarter."
• First Quarter of 2002: "In Capital Reporting, Myers told Sethi to go see Vinson, who would have the amount to be capitalized. When Sethi did so, Vinson handed him a Post-it Note that had the $818 million adjustment on it. Brian Higgins once again refused to make the necessary allocation for the first-quarter 2002 capitalization entry. Despite his growing concerns, Sethi made the allocation because he was concerned that his immigration status would be jeopardized if he lost his job."
• First Quarter 2002: "$109.4 million was taken from the general accrual account that Vinson set up and reclassified to several SG&A balance sheet accounts in five large, round-dollar amounts. The only supporting documentation that we were able to locate for these entries was a Post-it Note listing the various SG&A accounts and the amounts that should be taken from the Vinson account."
• "We found hundreds of huge journal entries, many of them in round-dollar amounts, made by the staff of the General Accounting group without any support other than a Post-it Note or written instruction directing that the entry be made."

Forget about suing Andersen or WorldCom. It's time to go after 3M (MMM Quote).

5. I Should Hope So

If it isn't already clear, none of this could have been done without the guidance of Bernie Ebbers. After all, reports the bankruptcy examiner, a board member, "in discussing the deference the Board of Directors gave to Mr. Ebbers generally, referred to Mr. Ebbers as 'God,' 'Jesus Christ' and 'Superman.'" These references do not appear to have been ironic.

Appropriately enough, the investigative committee notes that WorldCom's board meetings followed a consistent format: "Each meeting opened with a prayer."

Everybody was looking for upbeat guidance on WorldCom. Even Bernie.

Glory Be Bernie!