This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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: April 27

Stocks in this article: CHK WMT BIG BP RSH

4. Wal-Mart's Mexican Mess

Like Caesar in Europe, Wal-Mart (WMT) came, saw, and conquered Mexico. Unfortunately, while it was creating its Latin American empire, the widely watched retailer forgot one of Julius's jewels of wisdom: Caesar's wife must be above suspicion.

Or, to loosely translate from the Latin: Only a schmuck breaks the law when the cops are on his tail.

Shares of Wal-Mart took an unholy 5% pounding Monday, as a result of a New York Times report that top executives of its Mexican subsidiary covered up a bribery campaign dating back to 2005 that enabled the company to quickly build stores throughout the country.

Shares of Wal-Mart de Mexico, or Walmex, which is 69% owned by Wal-Mart, sank 12% on the news, wiping out all of this year's gains for the stock. Walmex is the second largest publicly traded stock in the country and Mexico's largest private employer with 209,000 employees.

The NYT said that Wal-Mart informed the U.S. Justice Department in December 2011 about its potential violations of the Foreign Corrupt Practices Act only after the newspaper revealed its plans to go public with its allegations. Under that law, it is illegal for U.S. corporations and their subsidiaries to bribe foreign officials.

And while, yeah, like the Twist or underage drinking, everybody does it and that's the cost of doing business south of the border (Heck, the Mexican government doesn't even give a culo raton about the allegations!), Wal-Mart's brass should still know better, because if anybody should be acquainted with the law, both domestic and foreign, it should be these folks.

According to Bloomberg, Wal-Mart was a plaintiff or defendant in 3,044 federal court lawsuits -- and that's only since 2009! Gender and race discrimination claims, forced overtime, pay-bias, evidence tampering ... you name it, Wal-Mart is being sued for it.

We're not kidding. NBA players spend less time on the court than Wal-Mart lawyers do within one. The cast of Cheers faced the bar less than our buddies from Bentonville do. (Insert Charlie Sheen legal joke here.)

Seriously, Wal-Mart has operated for decades as a juicy target, and we are not referring to the company's competitor from Minnesota. Politicians, union activists, ex-employees, current employees and everybody in between have been angling for a shot at the retailing giant, so it makes very little sense for Wal-Mart to recklessly give its enemies such a clear opening.

In our view, if Wal-Mart really wants to stay on top, it needs to learn the one lesson that Julius Caesar never did. Quite simply, watch your back.

2 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
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!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • 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