Five Dumbest Things on Wall Street: April 24

Kellogg Gets Bowled Over

Cereal maker Kellogg(K) needs to stop milking its twisted statistics and move on.

Kellogg agreed to settle federal charges Monday that it misleadingly advertised that eating Frosted Mini-Wheats was "clinically shown to improve kids' attentiveness by nearly 20%." The proposed settlement does not mean that Kellogg admits to violating the law, but it does bar the company from making deceptive health claims about its breakfast and snack foods, according to the Federal Trade Commission.

Kellogg's national TV ads claimed that attentiveness improved nearly 20% in children who ate the cereal, compared with those who skipped breakfast entirely. The FTC arrived at a different conclusion, however. By their un-sugar-coated count, the children who ate Frosted Mini-Wheats for breakfast averaged just under 11% better in attentiveness, and they found relatively few were nearly 20% more attentive.

"We tell consumers that they should deal with trusted national brands," FTC Chairman Jon Leibowitz said in a statement. "So it's especially important that America's leading companies are more attentive to the truthfulness of their ads and don't exaggerate the results of tests or research."

Take that Tony The Tiger! Next time you say your Frosted Flakes are "G-r-r-e-a-t!", they darn well better be.

Despite surrendering to the government's demands for more honest ads, Battle Creek Michigan-based Kellogg remained defiant. In a statement, the company cited its "long history of responsible advertising," and said it continues to stand "behind the validity of our clinical study."

Tough talk from a company that just got squished like a soggy corn flake.

Dumb-o-meter score: 90 - Will Kellogg's next cereal for inattentive kids be "Ritalin Loops?"