5. Abbott's College Craziness In response to last Thursday's news that Abbott Labs ( ABT) misstated the academic credentials of one of its most senior executives, we here at the 5 Dumbest Lab decided to call the drug maker to get the facts straight. 5 Dumbest: Hey Abbott. What's the name of the college where Richard Gonzalez got his degree? Abbott: Sure. That's easy. What is on second. 5 Dumbest: Wait, you know who we are talking about, right? Richard Gonzalez, the guy you picked last October to head your $18 billion AbbVie drug business once you spin it off. That's who. Abbott: Sorry. We misunderstood. We thought you said what, not who. Who is on first. 5 Dumbest: Who is? Abbott: Exactly. 5 Dumbest: Hold on a minute! Is this some kind of a joke or something? Gonzalez gets busted for lying on his corporate biography about holding a bachelor's degree from the University of Houston and a master's from the University of Miami, both in biochemistry, and this is your response? Why are you acting dumb? Abbott: Why? We thought you said Who. If you want to know Why, well, he plays left field. 5 Dumbest: Will you cut it out with that crap already? We're not Lou Costello and you are Abbott Labs, not Bud Abbott. This is serious stuff and you can't just write it off as "an administrative error." Maybe you don't remember what happened to Yahoo (YHOO) CEO Scott Thompson last May. Or, maybe you simply don't know. Abbott: Don't know. Of course. That's easy... 5 Dumbest: STOP! We know how this goes. Don't you say third base! Abbott: Fine. We won't then. 5 Dumbest: Look, if that's your attitude then we'll tell you what happened to Scott Thompson. He got canned by an activist investor for lying about his education. But hey, your stock is up 35% in the past year while Yahoo's was dead money. So if all you care about is the stock price and not the truthfulness of your executives then we don't give a darn. Abbott: What? 5 Dumbest: Cut it out already, would you? We know that's how the vaudeville bit ends. We say we 'don't give a darn' and you say 'That's our shortstop.' Well, you can save it, because it's simply not funny. Be honest. Isn't that what you were going to say? Abbott: Not at all. We just don't give a darn.
4. Wet Seal's Campaign Seriously folks, forget about Romney versus Obama. The presidential contest is downright tame compared to the smear campaign being waged over Wet Seal's ( WTSLA) board -- and not even a smidgen as stupid. The latest exchange between the teen fashion retailer and the Clinton Group, the activist hedge fund which owns about 5% of its shares, occurred Monday when Wet Seal's management sent a letter to shareholders accusing the Clinton Group of day trading the company's shares. For those that may have forgotten, the Clinton Group failed in its June bid to push the company to sell itself, so it nominated a slate of board candidates to do its bidding instead. "For example, over the past six trading days (Sept. 21-28), Clinton Group has sold over 127,000 Wet Seal shares at an average price of $3.22 and bought back only 33,000 shares at an average price of $3.12. Similarly, on Friday, September 7, the day Clinton Group filed its Consent Statement, it bought 155,000 shares at an average price of $3.10. The next trading day, Monday, September 10, Clinton Group turned around and sold 100,000 shares at $3.25," writes Wet Seal's current board in the letter, citing filings with the Securities and Exchange Commission. Based on all that activity, Wet Seal alleges that "one could speculate that Clinton is a seller when the stock trades above the $3.20 level." Well, there's no debate that Clinton is doing a heck of a lot of buying and selling, almost as much as Hillary Clinton (no relation as far as we know) did when she was trading cattle futures back before Bill became president. And speaking of Hillary's husband, the Clinton Group was positively Clintonesque in its defense of its trading practices. "The Board's claim that Clinton Group's motives are suspect because we have been 'day trading' the stock is absurd. We have been the single largest net buyer of the Company's stock in 2012," responded the Clinton Group. Of course, they sold a lot of shares too, but not necessarily on the same day, or even the same week as their original purchase. So, technically speaking, the Clinton Group was not really day trading. Or, to paraphrase Slick Willie himself, it depends on what the meaning of the words 'day' and 'trading' are.
3. AmEx Gets Charged American Express ( AXP) settled the bill this week. Too bad the charge was for $112.5 million. The charge card giant announced Tuesday its plans to pony up $112.5 million in refunds and fines to resolve allegations that it stuck consumers with unlawful late fees and lied to get customers to buy extra credit card services. AmEx is refunding $85 million to about 250,000 customers and is paying $27.5 million in civil fines to satisfy the complaints of four separate federal agencies, including the Federal Reserve, the Consumer Financial Protection Bureau and Utah regulators. Yes folks, membership does have its privileges and apparently one of those privileges is getting shafted. Furthermore, it wasn't just a one-time thing. According to the complaint, the violations occurred from 2003 to this past spring, so the credit card giant was scamming its customers before, during and after the so-called credit crisis. To which we say: Good for you AmEx! Why should Goldman Sachs ( GS) have all the fun? To be fair, AmEx is not the only one getting squeezed now that the Feds have finally gotten around to focusing on credit card issuer abuses. Last week, regulators announced an agreement by Discover Bank, a unit of Discover Financial Services ( DFS), to refund $200 million to customers and pay $14 million in fines to settle accusations that it pressured customers to buy costly and often unnecessary add-on services like payment protection and credit monitoring. Of course, despite the sizable settlements and clear wrongdoing, neither Amex nor Discover admitted or denied the charges. What a crock. Maybe the next time one of these companies mails us a bill we'll try that trick too, although we doubt it will work.
2. Whitman Channels Obama Why shouldn't Meg Whitman blame the previous administration for her economic problems? If it's working for President Obama in his race against Mitt Romney, then it may help her keep her job as well. The Hewlett Packard ( HPQ) CEO, who took the top job last year after a failed run for the California governorship, pointed the finger at her predecessors for the company's recent failings at an investor conference on Wednesday. Whitman told the crowd that HP's excessive turnover in the corner office -- three CEOs in the past three years -- is preventing a quicker turnaround for the troubled tech giant. Whitman also lowered the company's profit projections for fiscal 2013 to $3.40 to $3.60 per share. The Street had already penciled in earnings of $4.17 per share. Shares of HP sank 13% to $15 on her buck-passing. "My belief is that the single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices and frankly some significant executional miscues," Whitman told the crowd. "This is important because as a result it is going to take longer to right this ship than any of us would like." So how does Captain Meg plan to turn the ship around? Well, unlike President Obama and the national economy, she is actually counting on widespread lay-offs to help resuscitate HP's fortunes. The company is already in the process of canning 29,000 employees over the next two years to get costs into line with slowing corporate spending and plummeting PC demand. Hmmm. We wonder what Governor Whitman would have said to HP CEO Whitman about all those lay-offs had she won that political race. Luckily (or perhaps unluckily) HP CEO Whitman will never be forced to answer that question. So when will Whitman -- who last year at her inauguration pronounced "I believe HP matters -- it matters to Silicon Valley, California, the country and the world" -- get things at HP moving again? "Fiscal year 2015 will be the year of acceleration," said Whitman. "Revenues should be growing faster than cost." 2015 huh? At this rate that's still pretty ambitious Meg. Maybe you should ask for four more years.
1. (More) Fat Fingered Foolishness Average investors may be fleeing the stock market on account of the 2010 May flash crash, Facebook's ( FB) IPO fiasco and Knight Capital's ( KCG) collapse, but we here at the 5 Dumbest Lab simply can't get enough. You see, those kinds of electronic trading glitches are good for our business because we literally feed on Wall Street stupidity. As for the exchanges, well, not so much. Our schadenfreude streak continued this past week when Nasdaq OMX ( NDAQ) cancelled 168 "erroneous" trades of Kraft Foods Group ( KRFT) totaling almost 30,000 shares that had pushed the food maker's stock up about 29% in a single minute. Kraft shares spiked as high as $58.54 after opening at $45.44 immediately after the stock opened for trading Wednesday morning. Kraft stock finished the turbulent day down 1.2% to $44.87. "While it is difficult to say with any degree of certainty, it seems that this might be the case of mishandling a buy order through a 'fat finger' incorrect limit or using a far too aggressive order type or algo," said Mark Turner, head of U.S. sales trading at electronic broker Instinet in an e-mail to Bloomberg. Turner added that the exchanges, which in this case included NYSE Arca, Nasdaq, Direct Edge and BATS, handled the error in accordance with their error guidelines. Good for them. We're glad to know they can finally control a major screw-up once it gets started. As for stopping them altogether, well, not so much. And we're fine with that! --Written by Gregg Greenberg in New York.