The 5 Dumbest Things on Wall Street: March 25

5. Stern Suits Up Against Sirius XM

Howard Stern in a spat with his employers!? Who would'a thunk it?

Actually, when it comes to Stern and his relationship with the suits, it's always a matter of when, not if, he'll turn on them -- something current employer Sirius XM ( SIRI) may have forgotten.

If so, they got a reminder this week when Stern filed suit against his company for allegedly failing to pay stock awards it owed the shock jock in exchange for helping the satellite radio company surpass its subscriber growth target. At the end of December 2010, the company had 20.2 million total subscribers, the highest number of net subscribers in its history. Stern, naturally, believes he played a not-so-small part in making that happen.

One Twelve, Stern's production company, and his agent, Don Buchwald, claim Sirius didn't adhere to its five-year compensation agreement. According to the suit, Sirius gave Stern his initial bonus stock award of 34.4 million shares, then valued at $225.8 million, after he signed on in January 2006, but has failed to do so over the past four years. The self-professed "King of All Media" is claiming that he should have received a new stock award each year.

"Pursuant to our October 2004 agreement with Stern, we agreed to deliver these shares in December 2010, or earlier if as of the end of any fiscal year we exceeded agreed upon subscriber targets," Sirius said in a document filed with the Securities and Exchange Commission on Jan. 5, 2006.

How Stern and Sirius management were able to work out a new contract in December is particularly surprising, considering that Stern made it known this would be an issue. Last year, when Stern complained about not receiving his bonus, Sirius XM's general counsel Richard Basch told him and Buchwald that he did not give him the stock awards because the company did not count XM's subscribers toward the total number of Sirius subscribers. Gotta love that legal logic.

Poor Sirius investors thought their Stern nightmare was over after a new contract was ironed out before the end of the year with very little drama. Little did they know Sirius management seems to have decided to play a game of chicken with its most influential and vitriolic talent. Brilliant. When news of the suit surfaced on Wednesday, an analyst downgraded Sirius to a hold.

4. RIM's PlayBook Late to the Game

It's one more delay and another strike against Research In Motion's ( RIMM) PlayBook, which is already behind in the count.

The eagerly-anticipated BlackBerry tablet effort by RIM, which has been the subject of countless sneak peeks, finally got an official launch date, but it won't hit this month.

RIM says the PlayBook will go on sale April 19 at electronics retailers and at AT&T ( T) and Verizon ( VZ) stores. Best Buy ( BBY) started taking orders for WiFi-only PlayBooks online Tuesday, with delivery promised for April 19.

Delays have plagued RIM's effort to catch up with Apple ( AAPL), Motorola ( MMI) and Samsung in the tablet race. Last year, thanks to an apparently flawed Marvell ( MRVL) chip, RIM had to kill the BlackPad, its original tablet device. To avoid going to a developers' conference empty-handed in October, RIM rushed out a PlayBook prototype running on QNX software.

RIM's PlayBook production rate is currently running at about 500,000 PlayBooks a month, and supplies are now headed into distribution, said Rodman Renshaw analyst Ashok Kumar. This should help alleviate anxiety about further delays, but it equals a paltry presence in the young market. By comparison, production of Apple's popular iPad 2 is running at a rate of 2.5 million a month.

Apple has all but squelched the tablet competition, with rivals like Motorola and Samsung gaining little ground. The RIM PlayBook will be the fourth sizeable player in the market, and its QNX operating system represents a much smaller sales opportunity for application developers targeting Apple, Google's ( GOOG) Android and even Microsoft's ( MSFT) Windows Phone 7 software.

3. NY Times Paywall Crumbles Easily

The New York Times ( NYT) has yet to introduce its new online pay-wall plan but hackers already climbed over it this week.

The new subscription system for the company's namesake newspaper debuts on March 28, allowing nonsubscribers 20 article views each month before the wall kicks in, or better put, until one decides they'd like to allow the pay-wall to kick in. All articles linked to the Times Web site from social media networks such as Twitter and Facebook, as well as five articles a day from search engine sites like Google, can be viewed independent of the limit, leaving a huge gap in the wall that the broadsheet is now seeking to plug.

The creators of the FreeNYTimes Twitter feed quickly figured out the loophole and started tweeting links to every story on the site. The Times quickly convinced Twitter to take that one down. But, oh, the Internet. Close one shop down and it sprouts up somewhere else. NYTClean popped up earlier this week to help readers without a subscription circumvent the pay-wall. The simple browser application, released by Canadian coder David Hayes, allows users get passed the wall with the aid of four lines of code.

"'Released' is probably even a little strong," Joshua Benton at Nieman Journalism Lab said. "It makes it sound like there was an extended development process. All NYTClean does is call four measly lines of Javascript ... It barely even qualifies as a hack."

The Times spent somewhere between $40 million and $50 million to build the pay-wall. Despite that, publisher Arthur Sulzberger seems to have no idea who's reading his paper, or how everyday people use the Internet to their advantage.

"Can people go around the system? The answer is yes. There are going to be ways," Sulzberger said at an appearance at the Paley Center for Media. "Just as if you run down Sixth Avenue right now and you pass a newsstand and grab the paper and keep running you can actually get the Times free." Oh, so we're not savvy Web users, we're all snatch and grabbers.

"Is it going to be done by the kind of people who value the quality of The New York Times reporting and opinion and analysis? No," he continued. "I don't think so. It'll be mostly high-school kids and people who are out of work."

Shortly after uttering this gem, Sulzberger was smacked with a sudden moment of self-realization. Maybe he saw what it would look like in print. "I can't believe I just said that." Neither can we.

If the paper boy is standing on the sidewalk handing out the Times for free, why would anyone feel it necessary to steal it from the unsuspecting sidewalk news vendor?

2. Bank Dividends: WINNING

U.S. banks have apparently completed dividend rehab. While some can resume their normal lives, others need to keep the government ankle bracelet on to make sure they don't pull a financial Charlie Sheen and hit the "divvy" again.

But just like the addict that can't stop, banks are scrambling to return to a dysfunctional lifestyle that landed them on skid row: the life-shortening and ever-increasing dividend.

Over the past week, JPMorgan Chase ( JPM), Citigroup ( C) and Wells Fargo ( WFC) announced that they will resume or increase dividends. Others, such as Bank of America ( BAC) and Capital One Financial ( COF), weren't so lucky. They remain in rehab until they are strong enough to handle the real world.

As bankers will tell you, the dividend has turned into a brutal mistress. It is something that investors, especially institutional investors, have come to expect as a quid pro quo for owning shares that offer growth in the less-than-nothing range.

In many ways, dividends have turned into a shareholder protection scheme. A few notes stuffed in an envelope every quarter for investors to make sure, you know, nothing bad happens to a bank's stock.

But when you talk to a banker, they are simply "returning capital to shareholders." God's work, really.

The only problem is that after all the stress tests and dividend anxiety of the past three years, not everyone is sure that there is really any capital to return.

A report issued by Moody's points out that banks that were given a green light to offer dividends may not have the balance sheets to support them.

"Although not unexpected, banks' increased willingness to increase their capital outflow to shareholders is credit negative because it comes at a time when the economic recovery is still fragile, and U.S. banks' credit quality remains vulnerable to another economic downturn," Moody's says.

Translated: We have no idea where they are getting the money from.

While dividends have their place in the investment universe, it seems that the banking industry's unhealthy reliance on them has become self-destructive.

After essentially being put into Uncle Sam's Dividend "Sober House" for three years, banks rushed out to issue new dividends with questionable capital to support them. A penny here, 3 cents there. Even Bank of America, which had its real dividend rejected, couldn't get away from the term. They are offering a "peace dividend."

Pathetic really.

Perhaps it's time that bank investors come to terms with the co-dependent, self-destructive dividend behavior. We went cold turkey in 2008, we can do it again.

It's time for an intervention.

1. Billable Briefs

Let's call it the case of white collar crime meeting the waistline.

Former Qwest Communications ( Q) CEO Joseph Nacchio, currently serving a 70-month sentence for selling $52 million worth of stock based on insider information, is suing his former defense team at Roseland, N.J.-based Stern & Kilcullen. The former Qwest CEO alleges that among the $25 million in billings from his former legal team, he footed the bill for tens of thousands of dollars in breakfasts, in-room movie rentals charged to hotel room bills, and yes, attorney underwear purchases, according to a court complaint made by Nacchio in state Superior Court in Newark, N.J., and reviewed this week by Bloomberg.

There are also some actual legal charges made in the case, such as professional negligence and the failure of the Nacchio's lawyers to use a key witness who might have prevented a conviction. Yet the part about the underwear bilking may prove what happens when a smart guy who is dumb enough to get embroiled in insider trading is sent to jail for 70 months -- he's got too much time in the prison library to review his own case (and he's probably pretty jealous of those on the outside able to watch movies in hotel rooms while in their silk underwear).

It was a busy week in the world of insider trading, too. Goldman Sachs ( GS) CEO Lloyd Blankfein made for the biggest white collar crime headline, when he took the stand in the case against Galleon Group founder Raj Rajaratnam. Blankfein testified that former Goldman Sachs director Raj Gupta violated the investment bank's confidentiality policy in passing on information to the Galleon Group manager.

The financial press was on the edge of its collective seat during Blankfein's testimony, with bloggers furiously posting with each step that Blankfein took towards the witness stand -- "he's on the stand right now!" There was at least a minor embarrassment for the Goldman Sachs CEO as Blankfein had to listen to lawyers read out loud from Goldman's praise of Gupta when he resigned from the board. Yet the Blankfein testimony was much ado about some typical legal back-and-forth, with Blankfein noting that Goldman's code of conduct doesn't address whether confidential information is the same as "material inside information," the legal standard for insider trading, and the Goldman CEO stating that at the time of the statement about Gupta's resignation he really didn't know all that much about the allegations.

Which brings us back to the exciting world of insider traders getting the shaft when high-priced lawyers buy designer underwear at Barney's.

Noted legal blogger and law professor Jonathan Turley wrote that the legal world hasn't had such a high-profile case involving undergarments since former Covington & Burling partner David Remes, a human rights lawyer who represented Guantanamo Bay detainees, made worldwide headlines for dropping his pants during a 2008 news conference in Yemen to demonstrate how detainees were body-searched. Remes would later say that he wished the world cared more about the suffering of the detainees than the fact that he dropped his pants to make their case.

After a week during which the Goldman Sachs CEO took the stand in the market's most high-profile insider trading case, let's hope the courts pay more attention to investors suffering when the investment bank bigwigs and hedge funds play naughty, as opposed to one convicted insider trader getting caught with his pants down, and then crying out about underwear for which he shouldn't have paid.

In light of all this dumbness, we now ask you: Which is this week's dumbestof the dumb stories? Take the poll below to see what TheStreet has tosay.

Which is this week's dumbest of the dumb stories?

Stern Suits Up Against Sirius XM
RIM's PlayBook Late to the Game
NY Times Pay-wall Crumbles
Bank Dividends: WINNING
Billable Briefs

This article was written by a staff member of TheStreet.

More from Opinion

Why Google's Search Momentum Won't Be Badly Hurt by New EU Rules

Why Google's Search Momentum Won't Be Badly Hurt by New EU Rules

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Time to Talk Tesla: What Happened This Week, Elon?

Time to Talk Tesla: What Happened This Week, Elon?

Apple Needs to Figure Out Its Self-Driving Vehicle Strategy

Apple Needs to Figure Out Its Self-Driving Vehicle Strategy

Throwback Thursday: Tesla, Chip Stocks, TheStreet's Picks

Throwback Thursday: Tesla, Chip Stocks, TheStreet's Picks