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Five Dumbest Things on Wall Street: Aug 7

Accountants in an accounting mess; advice for Goldman; the value of Paula Abdul; Apple's Orwellian redux; and eBay's bad timing.

Huron For Dummies

NEW YORK (

TheStreet

) -- Shares of

Huron Consulting Group

(HURN) - Get Report

sank almost 70% Monday after it was snagged in an accounting scandal.

An accounting company in an accounting mess? Come on guys, at least give us a challenge. This is Dumbest 101.

Late last Friday, Huron announced it was replacing Chairman and CEO Gary Holdren, as well as CFO Gary Burge, after an audit committee discovered shareholders of four businesses that Huron acquired between 2005 and 2007 improperly divvied up portions of their acquisition-related payments among themselves and choice Huron employees.

In a statement on Monday, the company maintained that the payments were not "kickbacks," because three employees were client-serving and administrative staff of the acquired businesses. Nevertheless, the class action suits have already started rolling in against Huron, whose Web site hilariously says the company helps clients "comply with complex regulations."

The company, which provides accounting and consulting services for Fortune 500 companies and academic institutions, also said Chief Accounting Officer Wayne Lipski will depart the company.

Like we didn't see that one coming.

And in another move straight out of the dumbest textbook, Huron lowered its net profit for the period from 2006 to first quarter 2009 to $63 million from $120 million. In addition, Huron slashed its 2009 revenue outlook to a range of $650 million to $680 million from its prior view of $730 million to $770 million.

For those unfamiliar with Huron, the Chicago-based firm was founded in 2002 by 25 partners from Arthur Andersen. Yep, the same Arthur Andersen that collapsed in connection with the

Enron

accounting scandal in 2002.

Wow. You could have knocked us over with a feather.

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Dumb-o-meter score: 95 -- Unlike Huron's books, this dumbest score is perfectly accounted for and will not be revised.

Bialystock, Bloom and Blankfein

The blonde bombshell secretary in

The Producers

famously tells her bosses, "When you've got it, flaunt it." The folks at

Goldman Sachs

(GS) - Get Report

better not take her advice.

Goldman Sachs CEO Lloyd Blankfein is cautioning his employees against making pricey purchases or brazenly displaying their wealth, according to this week's

New York Post

. The tabloid says Blankfein's goal is to cool the public firestorm over Goldman's outsized profits in light of the $10 billion in taxpayer bailout money the company received last year.

Goldman has since returned that TARP money, but critics have not let up on the gold-plated investment bank, especially following its latest quarterly earnings report. Goldman banked $3.44 billion in profit in the second quarter, mostly from trading revenue. The firm also set aside $11.4 billion for employee compensation, or an average of $324,600 per employee as of the end of June. If this trend continues, per-employee compensation and benefits would eclipse the firm's record high of $661,490 in 2007.

"This is a sensitive time for us, and

Blankfein wants to make sure that we're not being seen living high on the hog," said one Goldman exec to the

Post

.

Oh, stop being a fuddy-duddy, Lloyd. The whole reason Goldman staffers pledge undying loyalty to the firm is so that they can make those big-ticket purchases to make their friends jealous.

Who cares if some loser

Rolling Stone

writer calls Goldman "a great vampire squid wrapped around the face of humanity"? He gets paid a few dollars a word. You get paid a few thousand dollars a minute.

It's not just frustrated journalists targeting Blankfein's money-making machine, however. It's also the Feds. Goldman disclosed Wednesday in an

SEC

filing that the government has launched investigations into its pay practices and credit-derivatives trading. And last week, New York state attorney general Andrew Cuomo raised a few pulse rates by pointing out that Goldman paid 953 bonuses of $1 million or more last year, even as Congress was funneling it money.

We say Cuomo and Congress have it all wrong.

Watching Goldman bankers flash a few bucks is merely revolting. Learning that the government gave Goldman billions without knowing a single thing about the company's operations is what scares the daylights out of us.

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Dumb-o-meter score: 90 -- Who knew the head vampire squid could be such a party pooper?

Money For Nothing (And a Ditz for Free)

Shame on

Fox TV

and its parent

News Corp.

(NWS) - Get Report

for letting "American Idol" judge Paula Abdul leave. She was worth every million they paid her or none at all.

Late Tuesday, it was revealed that the loopy former Laker Girl will be quitting the hit show after eight years. Her announcement came one day after Fox said that her bikini-sporting rival Kara DioGuardi would return for a second season on the "American Idol" judging panel, which includes the snarky Simon Cowell and congenial Randy Jackson.

Abdul's keen eye for talent and precise feedback (snort) netted her about $4 million a year. According to various media sources, she initially demanded as much as $20 million for her services (whatever they are), yet ultimately lowered her asking price to $12 million (surely a steal in this economy).

"With sadness in my heart, I've decided not to return," Abdul said in a posting Tuesday night on her Twitter account. "I'll miss nurturing all the new talent, but most of all being a part of a show that I helped from day 1 become an international phenomenon."

Quick, somebody get us a tissue. We're getting all

verklempt

over here. What on earth will we do without her?

Well, most likely we'll see her pretty soon on ABC's "Dancing With the Stars" or some other

Disney

(DIS) - Get Report

reality show tailor made for her so-called skills.

OK, but what will Fox do without Abdul on their number-one-rated program?

TheStreet Recommends

Well, that's obvious, they will clear salary cap room to sign the show's real star Simon Cowell. The petulant Brit is reportedly angling for a new multiyear deal that would boost his pay from $36 million to the $45 million range. And that comes after host Ryan Seacrest inked a new contract that pays -- well, overpays -- him $30 million over three years plus another $15 million for merchandising rights to his image.

Put it all together and there is clearly less of the American Idol pie to go around for a third judge. And right now, News Corp. needs every crumb it can get. The global media company reported a fourth-quarter net loss of $203 million on Wednesday after significantly writing down the value of its social networking Web site MySpace, for which it paid $580 million in 2005.

Abdul's demands are cheap compared to the MySpace debacle, in our view. So we say Fox should just shell out a few bucks and bring her back.

The price of Paula's incoherence is a pittance compared to breaking up the best cash generating team on TV since

Seinfeld

.

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Dumb-o-meter score: 85 -- Fox said Abdul was "a tremendous talent" and was "saddened" to see her go. We could be mistaken, but didn't Paula say the same about William Hung?

Apple Does Orwell

Apple

(AAPL) - Get Report

became a household name following its famous

1984

Super Bowl commercial. But now the firm is acting like Big Brother himself.

The consumer electronics maker tried to silence a father and daughter with a gag order after the child's iPod exploded and the family sought a refund from the company, according to Monday's

Times

of London. The Times said Apple would only compensate the family if they agreed to sign a settlement that opened them to legal action if they ever disclosed the terms of the settlement.

And to think just

last month

we accused

Amazon.com's

(AMZN) - Get Report

Jeff Bezos of being an Orwellian overlord! Now we find out it's really Steve Jobs trying to control us.

Liverpudlian Ken Stanborough told the Times that after dropping his 11-year-old daughter's iPod Touch last month "it made a hissing noise" and then within 30 seconds "there was a pop, a big puff of smoke and it went 10 feet in the air."

Stanborough proceeded to contact Apple, which denied liability, but in a letter promised him a refund as long as he agreed to "keep the terms and existence of this settlement agreement completely confidential." Any breach of confidentiality, warned Apple, "may result in Apple seeking injunctive relief, damages and legal costs against the defaulting persons or parties."

Stanborough refused to sign the letter, calling Apple's behavior "disturbing," Other exploding iPod victims, however, have apparently been pocketing Apple's hush money in droves.

Last week, Seattle TV station KIRO reported that it obtained 800 pages of documentation about faulty iPods from the Consumer Product Safety Commission (CPSC) following a Freedom of Information Act request. The station said it was unable to get hold of the documents for months after "Apple's lawyers filed exemption after exemption." CPSC investigators suggested that in those cases the iPods' lithium ion batteries could be the source of the problem.

And silencing the outcry over bad batteries is not Apple's only attempt at thought control. Daring Fireball tech-blogger John Gruber

accused

Apple of censorship in its App Stores this week after it removed from its iPhone dictionary so-called objectionable words like "ass" and even "screw."

If Apple keeps this behavior up, it'll only be screwing itself.

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Dumb-o-meter score: 80 -- Nobody knows where Steve Jobs is, but there's no hiding from Apple.

EBay's Barron's Bust

It didn't take long for the bright lights of

Barron's

to blind

eBay

(EBAY) - Get Report

.

EBay's PayPal unit experienced a worldwide system outage on Monday, leaving millions of customers of the online payments service temporarily powerless to complete transactions. The timing could not have been worse for eBay either, coming on the heels of this weekend's bullish

Barron's

cover story.

The outage -- which the company blamed on an "internal network hardware issue" and not the

Barron's

version of the

Sports Illustrated

jinx -- started around 1:30 EDT and affected all PayPal customers for about an hour. PayPal continued to experience scattered problems until about 6:10 p.m. EDT, according to the company.

"We are looking into how to address our affected merchants," said a PayPal spokesman. PayPal is the world's largest online-payments service, with 75.4 million active users, including both small-time eBay merchants and large e-commerce companies, such as

Wal-Mart

(WMT) - Get Report

.

Maybe they should have stopped looking at themselves in the mirror after that glowing tribute in the influential Wall Street weekly.

"The online auctioneer is evolving into a business much more like

Amazon

(AMZN) - Get Report

-- only more profitable," wrote Barron's Michael Santoli. "Its PayPal and Skype units are the icing on the cake."

Santoli makes the case that eBay, up over 56% year-to-date, has gone from "overhyped and overvalued" in the last decade to "underloved and underpriced." Unfortunately, he fails to warn readers that they may also be "overly sensitive" and "under equipped" to handle the media spotlight.

PayPal's terms of service state that it isn't liable for "lost profits or any special, incidental or consequential damages" in connection with their Web site or service.

How about "choking under pressure?" Or does that come under the Act of God clause?

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Dumb-o-meter score: 80 -- eBay went from eBuy to egad overnight.

Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.