1. Nice Deduction, WatsonUnitedHealth ( UNH) changed its tune this week.
The Minnetonka, Minn., health insurance giant has come under fire for profligate and possibly illicit executive pay. The furor started in March when The Wall Street Journal reported that UnitedHealth may have backdated options to give recipients bigger gains. The paper also said CEO William McGuire was sitting on a $1.6 billion unexercised stock-option hoard as of year-end.
UnitedHealth responded by authorizing not one, but two probes of the matter, one by the company and one by a special independent panel of the board. UnitedHealth also suspended option grants to top executives. But the company insisted it believed that its grant process was "appropriate."
Judging by Wednesday's quarterly report, UnitedHealth may be having second thoughts about that line now. The 10-Q noted that the Securities and Exchange Commission has
|Cisco Carnival |
This ride could be bumpy
2. Turning PointThe momentum has turned at Cisco ( CSCO).
The San Jose, Calif., networking giant posted a
CEO John Chambers was quick to play to the crowd on the call. Chambers said that while other information technology companies have warned of a slowdown, "Our business momentum is actually increasing." The contrast wasn't lost on investors who had just been hit by a
|Morgan Stanley Mailstrom |
Check your 'sent' basket
3. Spring CleaningMorgan Stanley ( MS) has put its stamp on yet another email scandal.
The giant investment house this week
The SEC says that over five years, Morgan Stanley "failed to produce tens of thousands of emails" in two conflict of interest probes -- one covering Wall Street research and another on initial public offering practices. The firm also "failed to conduct diligent searches for back-up tapes, including tapes that were accessible in the firm's offices and its storage facilities," the SEC says.
The agency says the firm's actions "compromised" the two investigations, which led to
Morgan didn't admit to or deny wrongdoing, though it did agree to institute new policies for preserving documents and to hire a consultant to review its efforts.
Of course, this isn't the first time Morgan Stanley has run into trouble with old emails. In November 2002, it and four other Wall Street firms each paid $1.65 million to settle charges they failed to keep proper email records. Morgan agreed as part of that settlement to review its email-retention policies.And just last year a Florida judge socked Morgan Stanley with a partial-default judgment after Morgan repeatedly failed to produce emails in a fraud suit brought by billionaire Ron Perelman. Morgan is appealing the $1.45 billion judgment in that case, in which some of the missing tapes eventually turned up in a Brooklyn closet. "Don't Become the Next Morgan Stanley," San Francisco's Institute for Spam and Internet Public Policy warned big companies in the wake of the Perelman setback. Well, maybe Morgan Stanley just can't help it. Dumb-o-Meter score: 88. Morgan Stanley says it's glad to have the matter behind it. Good luck there.
4. Cold RinseWhirlpool ( WHR) is washing its hands of a hefty chunk of its Maytag buy. Benton Harbor, Mich.-based appliance-maker Whirlpool said Wednesday it would
|Overstock, Good Times, Come On! |
We're gonna celebrate subpoena party with you
5. Dear PrudenceThe party rolls on at Overstock.com ( OSTK).
This week the Salt Lake City-based online closeout retailer got a Securities and Exchange Commission
It's not often that a company applauds a regulatory inquiry, but Overstock CEO Patrick Byrne did just that. "I may be the first CEO in history to celebrate receiving an SEC subpoena," he said in a press release Tuesday. "I believe our capital markets are broken in a deep way, our system of corporate voting and governance is a hoax, the savings of Americans are being drained through our financial system's fissure of unsettled trades, and the system appears to be cracking around Overstock.com."
Of course, last year Overstock filed a lawsuit alleging a wide-ranging conspiracy to manipulate its share price. Overstock alleges that research firm Gradient Analytics was in cahoots with short-sellers, including Rocker Partners, which owns a small stake in TheStreet.com (TSCM), publisher of this Web site. Both Rocker and Gradient have denied wrongdoing.TheStreet.com and James J. Cramer, its co-founder and major shareholder, were subpoenaed in February in connection with an SEC investigation of Gradient following Overstock's allegations. The SEC has agreed that it will not, at this time, seek to enforce the portions of the subpoenas issued to the company and other media firms, including Dow Jones ( DJ), that concern communications between journalists and their sources. Overstock's subpoena disclosure came just a day after the company agreed to raise $17 million by selling stock to unidentified investors. "Several parties have approached us regarding putting additional capital into the business, and we decided that it would be prudent to take it," Byrne said in a release issued after the close of trading Monday. But just two days later, Overstock apparently decided it would be even more prudent not to take it. The company offered Tuesday to