1. Frist for the Mill
insiders have had a certain healthy glow about them this year.
The Nashville, Tenn., hospital chain has been in the headlines as a result of the well-timed stock sales of Sen. Bill Frist, the Tennessee Republican whose family founded HCA.
The Securities and Exchange Commission and the Justice Department are probing whether Frist was tipped off that HCA's business was on track for a disappointing second quarter. Frist, who told his blind trust to sell just a month before a July 13 earnings warning hammered HCA's stock, has denied any wrongdoing.
But the Senate majority leader isn't the only big shot who could come under the microscope. On Thursday, HCA hinted that the probe was looking at other insiders. There's certainly no shortage of candidates: Execs and directors at the chain sold $112 million worth of stock in the first half of 2005, including $42 million worth in May and June, Mark LoPresti of Thomson Financial told The Associated Press.
just about every month has been busy for HCA insiders. February, for instance, saw HCA Chairman Jack Bovender sell 500,000 shares underlying options, clearing some $9 million. Two other senior managers -- Treasurer David Anderson and Chief Investment Officer Noel Williams -- joined three vice presidents in executing or filing to do multimillion-dollar transactions that month.
HCA hasn't commented on the timing of those sales, and it has pledged to cooperate with the government inquiries. In their favor, none of the HCA execs is known to have made statements like this 2003 gem from Frist, as reported in the Oct. 3 issue of
I put this into a blind trust. So as far as I know, I own no HCA stock.
Lucky for Frist, he managed to figure out he owned some just in time to sell this June.
Dumb-o-Meter score: 91.As investment strategist Peter Cohan told
Melissa Davis, "If he was really serious about being independent, he would have had a real blind trust -- instead of a seeing-eye-dog trust."
To view Colin Barr's humorous video take on Frist's blind trust luck, click here
Say We're Nice ... or Else!
Flight attendants are up in arms, but you'll never guess why.
No, it wasn't Delta's (DAL) - Get Report plans to streamline its operations, or Northwest's( NWACQ) demands for additional union concessions. It wasn't even the latest move in already sky-high oil prices. Why, it was the Jodie Foster thriller Flight Plan.
The Disney (DIS) - Get Report flick stars Foster as a widow whose 6-year-old daughter vanishes on a trans-Atlantic trip. The disappearance prompts panic from the girl's mom and skepticism from the crew and passengers, who have no record or recollection the child was ever on board.
At least, that's how the AP summarizes the plot. The Association of Flight Attendants, the Association of Professional Flight Attendants and the Southwest flight attendants represented by Transport Workers Union Local 556 have an entirely different take, however.
"The film, which portrays a flight attendant and Federal air marshal as terrorists and the lead villains, also depicts flight attendants as rude, unhelpful and uncaring," the group thunders in a Tuesday press release.
"This depiction of flight attendants is an outrage," adds AFA President Patricia Friend. "We will tell Hollywood that this disrespect to our profession is not going to fly."
Disney tells the
Los Angeles Times
it meant no offense. "There was absolutely no intention on the part of the studio or filmmakers to create anything but a great action thriller," a spokesman told the paper.
opening No. 1 at the box office last weekend with a $24.6 million take, we seriously doubt Disney is ready for a remake just yet.
Dumb-o-Meter score: 85. Rude and unhelpful flight attendants? Can't imagine.
Giving Till It Hurts
3. Try Again, Skipper
Larry Ellison has run aground in a bid to show off his giving side.
This week a California judge nixed a proposed settlement in an insider trading case involving Ellison. The billionaire software exec, owner of a custom-built 452-foot yacht, had pledged a $100 million charitable gift to resolve a lawsuit. The suit accused Ellison of profiting from nonpublic information in a well-timed early 2001 sale of some $900 million worth of Oracle stock. Just weeks later, the Redwood City, Calif., company reported a weak quarter that resulted in its shares being halved. Ellison has denied wrongdoing.
Critics had a field day with the proposed settlement, which was reached for the supposed benefit of Oracle shareholders but would have given them nothing but a $22 million legal tab. San Mateo County Superior Court Judge John Schwartz cited those fees in declining to rubber-stamp the settlement.
Of course, this isn't the first time Ellison's charitable exploits have failed to meet with the expected fawning. Back in 1997, Ellison was ready to take his place in the philanthropic pantheon with a $100 million computer gift to schools. But then archrival Bill Gates of
hogged up the spotlight with a $200 million gift of his own, matched by $200 million worth of software from his company. Ellison joked that it took Microsoft a year to respond to the Internet, six months to respond to the network computer and only six hours to respond to his big donation.
Then, a few years later, Ellison held lengthy talks with Stanford over a $150 million grant to establish an institute to study technology's effect on politics and economics. But officials at the Palo Alto, Calif., university were soon surprised to learn that they were competing for Ellison's money with Harvard,
The San Jose Mercury News
reported. It's not clear who prevailed in that race, though this year Harvard did land a $115 million promise from Ellison for a health care investment study. "It is so Larry Ellison," philanthropist and former
exec Catherine Muther told the
in 2001, referring to the unusual charity face-off.
"I give a lot of money to charity," Ellison said last week, according to
The Wall Street Journal
. "I have a lot of favorites."
We're sure. And maybe that's the answer when it comes to settling this case once and for all. As a reader suggested in Chris Nolan's
blog, "A real punishment would be that the money went to the Bill and Melinda Gates Foundation."
Dumb-o-Meter score: 82.Good to know that charity can begin either at home or on your yacht, depending on the circumstances.
4. Shooting Marbles
Giving isn't always its own reward, though.
. Investors shredded the student loan processor this week after a gift-giving scandal felled founder and CEO Daniel Meyers.
First Marblehead dropped 17% Wednesday before bouncing 3% Thursday as Wall Street mulled over the company's increasingly cloudy future. The thrashing left the stock down 60% for the year, near a 52-week low.
The Boston-based company has offered little detail beyond saying that Meyers "exchanged gifts with a former employee of a major client," in violation of policy. The
reported that he gave the gifts to a former
Bank of America
exec who was herself fired after a bank probe. Bank of America is First Marblehead's second-largest client, representing nearly a quarter of the student loans it facilitated in the last year, says the
But what must really burn First Marblehead shareholders is what they've received in return for Meyers' largesse. By the company's account, the stuff he bought was worth $32,000. But in the last two days alone Wall Street has managed to lop more than $300 million off First Marblehead's market value. We can only imagine where First Marblehead would be trading about now if Meyers had sprung for really pricey presents.
Dumb-o-Meter score: 80. Like it or not, this gift keeps on giving.
5. Kill Zone
is backing off some of its more shocking claims.
The Scottsdale, Ariz., stun-gun maker has modified its use of the word "nonlethal" in marketing material, the
reported. The company made the move to mollify Arizona officials who are probing safety claims.
The news comes as the Securities and Exchange Commission upgraded its own inquiry into the company's safety claims and accounting practices. The investigation is now formal, meaning the SEC has the power to subpoena documents.
As a result of the Arizona talks, Taser says it is now defining "nonlethal" according to Defense Department usage. The term means not that the weapon can't cause death, but that it's not intended to be fatal.
Taser also agreed to say the weapon is "more effective and safer than other use-of-force options," where it previously said Tasers leave "no lasting after effects."
Of course, there are still those who disagree. Amnesty International, which has called on police to suspend Taser usage pending further study, says it is "concerned that deployment of tasers, rather than minimizing the use of force, may dangerously extend the boundaries of what are considered 'acceptable' levels of force."
Of course, no one has ever accused Taser of pushing any boundaries.
Dumb-o-Meter score: 72. The company is launching an "educational campaign," President Tom Smith tells BusinessWeek, to counter claims like Amnesty's. Can't beat an outfit that takes a combative approach with Amnesty International.
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