The Five Dumbest Things on Wall Street This Week

1. How 'Bout Them CowBBBoys?

It took a bit longer than usual, but the folks at the Better Business Bureau have named the finalists for the International Torch Award for Marketplace Ethics.

This year, 28 companies got nods in four categories, including Aflac ( AFL), Kemper Insurance, Niagara Mohawk (a newly acquired subsidiary of National Grip Group ( NGG)) and Sun Life Financial ( SLC).

No one doubts that these companies and their hard-working employees are entitled to some recognition. In ethically troubled times such as these, what with various high-profile executives being charged for this and pleading guilty to that, it's good to see that someone still appreciates the value of a work ethic.

That said, this list has its cautionary angle as well. It has come to our attention that some prior Torch nominees and award winners haven't exactly stood the test of time.

Commercial Financial Services, a 1998 nominee, filed for Chapter 11 the same year it was nominated, after it improperly inflated the performance of assets backing securities it sold. Bankers Trust got a nomination in 1997, two years before it was forced to pay a $60 million criminal fine and plead guilty to three felony counts for diverting $19.1 million in unclaimed customer funds to boost performance.

Perhaps the biggest winner -- er, loser -- is cheapo retailer Dollar General ( DG), which beat out Bankers Trust for the 1997 trophy. Earlier this year, the company was forced to restate three years of financial statements, reducing net income by $199 million, because of accounting errors. Ever the ethical titan, Dollar General's management refused to reveal the accounting errors were made or who was responsible but did add that CEO Cal Turner Jr. would no longer be involved in preparing the company's financial results.

Don't get us wrong -- you can't blame the BBB. "Our judges evaluate the company's record at the time of the competition," says spokeswoman Holly Cherico. "As a PR director, I wish I had a crystal ball to see what these companies will do in the future."

Over the past year or so, investors have probably been wishing the same thing.

2. Dumb Name Change of the Week

As noted above, we know in the current environment that integrity is important. Even so, it may be possible to take that notion too far.

On Tuesday, a privately held clinical research firm called Integrated Research announced its new name. This freshly adopted moniker will reflect the company's new core value, a press release attests. What's the value?

You guessed it. "Above all, we're a team of dedicated professionals who believe integrity is the key to creating value," read the release. "It seems appropriate to usher us into a new era with a new name that communicates this core value."

The name? Integrium.

Though we don't doubt the company's devotion to doing the right thing, it sounds to us like this new name could just as easily stick to an over-the-counter truth serum for overzealous chief financial officers. Or it could be the newest element on the ever-growing periodic table of elements. It could even be a new beau for Altria, the "altruistic" company formerly known as Philip Morris ( MO).

With corporations falling over themselves to embrace this new trend in corporate labeling, we here at the Lab want to know what's next. Honestra? Trustoleum? Virtuity?

3. Attention Elected Officials

OK, Dumbest fans, gather the kids -- it's pop quiz time! With all the pressing issues facing America these days, what should the government's overriding goal be?


  • Fix Social Security.
  • Overthrow evil dictators in Iraq.
  • Assassinate known terrorists named Osama.
  • Make people named Martha cry before Congress.
  • Build out more "telecommunications network facilities."

If you guessed "E", then quite possibly you're a telecommunications executive at a trade conference.

Indeed, Eileen O'Neill Odum, Verizon's ( VZ) chief officer for customer service, recently told attendees at the Progress and Freedom Foundation's annual meeting that "the overriding goal of government should be to encourage the build-out of as many telecommunications network facilities as possible, as quickly as possible, by as many companies as possible."

As nice as that sounds, investors may recall all too well that the telecommunications industry has tried that tack already -- much to its detriment. At least part of the reason that so much of the industry is either in bankruptcy or desperately fighting off Chapter 11 proceedings, analysts agree, is that too many companies bought too much capacity when there wasn't that much demand for these services.

But Verizon's not just thinking of itself, of course. In the wake of Sept. 11, the company notes, America was "able to stay in touch and gain a measure of security because of the multiplicity of technologies -- landline, wireless, the Internet, email, instant messaging -- to name a few. If one or more failed, there were others to fill the void."

Memo to President Bush: Forget that missile defense shield -- we want DSL.

4. The Greater of Two Evils

So there's some evidence that fast food isn't always the healthiest choice out there. No surprise there. But no one has taken this thinking further than Belarus' president-cum-dictator-for-life, Alexander Lukashenko.

He wants to close six McDonald's ( MCD) restaurants in the capital city of Minsk and replace them with a Belorussian fast-food franchise selling "healthier" Russian fare like cabbage soup, sausages and fried mashed potato pancakes.

When Big Macs are losing market share to cabbage soup, you've got troubles. Five years ago, McDonald's didn't have much trouble getting into Belarus, opening its flagship store on the campus of Belarusian State University with a 40-year government lease. Oh, how times have changed.

After all, these guys have franchises in Pakistan. And when owner-operators there aren't fleeing anti-American demonstrators, they cater to local tastes, offering fare like the Chatpata Chicken Roll, Chicken Chutni Burger and Spicy Chicken Burger, which can be packaged with Aaloo fingers as part of a McMaza Meal.

McDonald's, make nice to Mr. Lukashenko. Cabbage Extra Value Meal with McSausages, anyone?

5. U.S. Airways: Bankrupt -- but Better Than Amtrak?

Ever since Amtrak discovered some itsy-bitsy, teeny-weeny cracks in shock absorbers on Acela locomotives, management can't tell whether it's coming or going.

The crazy train went off the rails two weeks ago, when Amtrak discovered half its high-speed Acela fleet had minuscule fissures in shock absorbers that could cause derailments. Since that's real bad for business, the nearly bankrupt railway operator yanked Acela trains off the tracks, except for two trains deemed defect free. That is, until the next day, when those two trains deemed defect free had defects and Amtrak pulled them, too.

By the middle of last week, a total of 11 trains were defective, but Amtrak had some good news for travelers. Five trains were deemed safe enough to carry passengers by the end of the week. That is, until the next day, when Amtrak found hairline cracks in the five trains and put 'em back on the shelf.

And like any railroad hemorrhaging $1 million a day because its $2.8 billion Acela investment was impersonating Dana Carvey's movie career, Amtrak vowed to come back. This Monday, Amtrak promised the world that nine trains would make a triumphant return to the rails and Mike Myers would finally return Carvey's phone call from 1995.

That is, until the next day, when Amtrak found issues with four trains.

A government hell-bent on making public companies more accountable for gaffes can't even straighten out the enterprises it's currently subsidizing. And at this point, why even bother? Amtrak says it needs $205 million from the government to avoid bankruptcy. Why should taxpayers subsidize potential derailments when flying is cheaper?

Research from the Five Dumbest Things Research Lab shows that the four-hour Acela train ride from New York to Boston costs $160 roundtrip, while a one-hour U.S. Airways ( U) plane ride between the two is just $115 roundtrip. If Acela ever gets back on track, maybe they can drop us off at the airport.

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