This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Five Dumbest Things on Wall Street This Week

1. Nice Deduction, Watson

UnitedHealth (UNH) changed its tune this week.

The Minnetonka, Minn., health insurance giant has come under fire for profligate and possibly illicit executive pay. The furor started in March when The Wall Street Journal reported that UnitedHealth may have backdated options to give recipients bigger gains. The paper also said CEO William McGuire was sitting on a $1.6 billion unexercised stock-option hoard as of year-end.

UnitedHealth responded by authorizing not one, but two probes of the matter, one by the company and one by a special independent panel of the board. UnitedHealth also suspended option grants to top executives. But the company insisted it believed that its grant process was "appropriate."

Judging by Wednesday's quarterly report, UnitedHealth may be having second thoughts about that line now. The 10-Q noted that the Securities and Exchange Commission has opened an options inquiry that could lead to "regulatory fines or penalties or other contingent liabilities."

UnitedHealth stressed that its internal inquiries aren't complete, but results so far indicate the company may need to restate financial results over the last three years to wipe out some $286 million in profit.

"The results of the review to date indicate that the company may be required to record adjustments to non-cash charges for stock-based-compensation expense in periods prior to January 1, 2006," UnitedHealth writes in the quarterly report. "If any such non-cash adjustments were deemed necessary, it may also result in compensation related to certain exercised stock options, previously thought to be deductible, to be nondeductible under Section 162(m) of the Internal Revenue Code."

Potential restatements? Possible tax trouble?

Somehow, "appropriate" isn't the word that comes to mind here.

Dumb-o-Meter score: 93. "We must strive to achieve the highest standards in all aspects of our corporate governance and compensation," McGuire said last week. We'll see what comes of that.

To view Colin Barr's video take on UnitedHealth's entry in Five Dumbest this week, click here .

1 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,051.82 -1.89 -0.01%
S&P 500 2,086.97 -1.80 -0.09%
NASDAQ 4,801.1570 -5.7020 -0.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs