The 5 Dumbest Things on Wall Street This Week: July 26

5. Cool Hand Cohen

Picture this Dumbest fans:

An SEC agent kneels before Steve Cohen and begins hammering on the iron shackles between his feet. Silence except for the HAMMERING AND CLINKING. Steve is silhouetted with the bright lights from the television cameras glowing behind him, reflecting off his bald head. The Captain looks past Cohen to the stunned traders in a line before him.

CAPTAIN (to Cohen)

You gonna get used to wearing them chains after a while, Stevie. Butyou never stop listening to themclinking. Cause they gonna remind you ofwhat I been saying. It's for your own good.


I wish you'd stop being so good to me Captain.

The Captain feeds his fury staring at Cohen then reaches out his hand behind him. SEC boss Mary Jo White lays the subpoena in it. Trembling with rage, the Captain takes a convulsive step forward and brings the legal summons down behind Steve's ear, knocking off his glasses. As Steve leans down to pick up his spectacles:

Don't you never talk that way to me!Never! Never!

The Captain's rage subsides and his voice becomes calm, reasonable.
CAPTAIN (to the traders)
What we got here is a failure to supervise. Some men you just can't reach, so you get what we had here last week, which is the way he wants it. Well, he gets it. I don't like it any more than you men.

Nodding curtly, the Captain and his crew turn to leave. The SEC agent throws the hammer down. It CLATTERS until it lands beside Cohen. The group heads towards the door until Cohen stops them mid-stride.
Um, excuse me, Captain. But what exactly does that mean?


What's that?
"Failure to supervise." I don't get it.

The Captain walks forward until he is nose-to-nose with Cohen.
You got something better in mind tough guy?
Well, if you're looking for a nebulous charge that will never stick, how about 'Failure to Communicate'?

The two men maintain their icy stares in silence. Mary Jo White steps up behind the Captain and whispers in his ear. He nods his understanding.
Can't do it Cohen. We're saving that one for Corzine.

4. FBN's Fall

What makes Sammy run?

Simple. Furniture Brands International ( FBN) CEO Ralph Scozzafava.

Shares of the beleaguered furniture maker fell over 5% last Friday and another 10% Monday to a reverse split adjusted $3.39, after SEC filings revealed that controlling shareholders Shan Huei Kuo -- a.k.a. Samuel "Sammy" Kuo -- and his wife Yi-Mei Liu -- a.k.a. "Grace Liu" -- are selling 267,355 shares of Furniture Brands common stock from their Samson Holding company. The sale will take Samson's ownership in the company to less than 10%.

Prior to the settlement of the sale, Hong Kong-based Samson reportedly held 1,031,624 shares of Furniture Brands, representing 12.8% of the company. The filing also states that the pair is considering blowing out the remainder of its interest in the company.

Hey, could you blame them after what Scozzafava did to that classic American manufacturer? In barely five years he took it from Thomasville to Palookaville (thanks again Budd Schulberg).

FBN stock has fallen over 95% since Ralph took the CEO spot. The company has failed to turn a profit in the past six years, losing $47 million in 2012. The Street expects the cash-strapped company to lose $6.11 per share in 2013 -- if it makes it to the end of the year of course.

Scozzafava has profited handsomely despite the firm's collapse, never missing a chance to prop-up his bonus along the way. Just this past March, for example, FBN lowered the threshold for its executive bonus plan thereby boosting Ralph's pay to $1.98 million.

Sadly, the circumstances could have been much different for FBN.

Well-known to be a shrewd operator, Sammy acquired Craftmaster Furniture in 2006 and was seeking to expand his American operations when he made a hostile bid for FBN the following year. FBN, however, still viewed itself as an industry giant and rebuffed Sammy's overture. As a result, Sammy amassed a major position in the company, but remained merely a face in the crowd as Ralph ran the once iconic company into the ground.

Yep, from Schulberg to Sammy Kuo to Ralph Scozzafava, it's always the same.

The bigger they are, the harder they fall.

3. Khuzami Cashes Out

"It's both aggressive enforcement and vigorous defense that are critical to justice and fairness," said former SEC head of enforcement Robert Khuzami to the NYT after Monday's announcement that he is leaving public service to earn $5 million a year as a partner in the Washington office of legal giant Kirkland & Ellis.

Thanks for the clarity and your service to our country Bob. Much appreciated. Still, you know what would be critical to us?

If you would simply take the money and shut the heck up.

Look. We don't begrudge Khuzami's decision to trade his government experience for cold hard cash. Revolving door, schmevolving door. This guy left a pile of dough on the table after spending seven years at Deutsche Bank ( DB) in order to return to Washington in 2009 to clean up the SEC in the wake of the financial crisis and Madoff scandal. In our view, this is his chance to make that cash back, so who are we to criticize him for it.

Furthermore, Bob wasn't solely concentrating on his next private-sector gig when he was running things at the SEC. Under his charge, the SEC brought a record 735 enforcement actions in fiscal 2011 and 734 actions in fiscal 2012, so he certainly wasn't your average clock-punching career bureaucrat.

Put simply. He gamed the system in the best possible way for everybody.

(Oh, and as for the high-minded idea that high-profile ex-government workers like Khuzami choose a monkish existence in academia as opposed to pocketing fat lobbyist paychecks? Well, our current Treasury Secretary Jacob Lew proved that idea to be high comedy based on his lavish, but brief stint at New York Univerisity before he sold out for even more money at Citigroup ( C).)

That said, if we were going to criticize Khuzami, it would be for not nailing a single high-ranking Wall Street executive -- say Dick Fuld, Jon Corzine or any of his old buddies at that subprime cesspool Deutsche Bank, just to name a few -- in the aftermath of the credit bubble.

Think about it. The SEC went to Wall Street and all it got was the Fabulous Fab Tourre. How's that for a T-shirt slogan?

Yeah, we know he got Goldman Sachs ( GS) to pony up $550 million about its toxic bond sales, but let's be honest, that's Lloyd Blankfein's bar bill at the club. His traders made that back in no time.

And now Khuzami will be able to join Lloyd at that elite club after taking a few years off to serve his country. Perhaps he can get a few tips from Robert Rubin while he's clinking glasses with the other bureaucrats turned figurehead investment bankers. You know, the Robert Rubin who jumped from Goldman to Treasury to Citigroup where he pocketed tens of millions for doing absolutely nothing except watch the bank go down the toilet.

Come to think of it. Whatever happened to that Rubin fellow anyway?

Washington could use a go-getter like him.

2. Menthol Mishegas

It wasn't the cancer that killed tobacco stocks this week. It was the cool, fresh taste.

Shares of cigarette-makers got smoked Tuesday following a Food and Drug Administration report that said menthol cigarettes probably pose a greater public health risk to young and African-American smokers than regular cigarettes. Lorillard ( LO), the biggest purveyor of menthol cigarettes with its Newport brand, sank over 4% on the news. Marlboro-maker Altria Group ( MO) and Reynolds American ( RAI) both fell around 3%.

Not that these minty flavored smokes are more or less toxic than the regular kind mind you. The FDA, which is mulling a ban on the specialty cigs, said the risk of disease is the same for both types.

No, the conclusion is that menthol's taste and cooling properties make it more attractive to younger smokers.

To which our clinically-based reply is: No duh!

You know what also makes smoking attractive to younger smokers? Johnny Depp and those Sex and the City women toking up all the time. Boy would we like to ban their terrible movies if we could, but unlike the FDA, we don't have that power.

The point is that if the FDA wants to ban cigarettes because they cause lung cancer, it should simply do that. Going after Marlboro's menthol brand because it's a gateway cigarette to Marlboro reds makes no sense. It's analogous to the Feds trying to crack down on cherry bubble gum because it may lead chewers to the original flavor.

Not that anything is going to happen of course, other than Lorillard, which counts on menthol smokes for 90% of its sales, taking a momentary beating. Not to worry though. Wells Fargo analyst Bonnie Herzog reiterated her buy on Lorillard shares Tuesday, saying "it could still be a long time until some type of final resolution is ultimately reached."

Huzzah, Herzog! We agree that nothing is going to happen, especially when the FDA says it's seeking "more information on outcomes and we are honestly soliciting comment in response to the questions about regulatory outcomes."

Oh my, after all this time and energy these guys still seeking comments. They have to be smoking something -- and it's probably not tobacco.

But if that's what they want. Fine. Here's ours.

If the real problem is the cigarettes themselves, then stop beating around the tobacco bush and attack it directly. This whole menthol mishegas is wasting everybody's time and money.

Now excuse us while we step out for an e-cig. All the cool kids are smoking those now anyway.

1. Dell's Thin Dime

Come on, Michael. Sparing the dime isn't exactly spoiling the shareholder.

Private equity giant Silver Lake Partners and Michael Dell magnanimously raised their $24.4 billion offer for Dell ( DELL) 10 full cents Wednesday, as the buyout consortium continues its never-ending battle against billionaire busybody Carl Icahn -- seriously, is there a Street fight he is not involved in? -- for control of the troubled PC maker. The revised offer of $13.75 a share increases Dell's buyout price by approximately $150 million and comes a week after the pair were unable to garner majority support for their takeover at Dell's July 18 shareholder meeting.

In case you were wondering, we here at the Dumbest lab were all set to write about that meeting until it was called on account of impotence.

A special committee of Dell's board of directors said Wednesday they will need to review the terms of Silver Lake's proposed price increase before making a recommendation to shareholders. To do that, the special committee adjourned Dell's shareholder vote until 10 a.m. EST on Aug. 2 and extended a deadline for its revised offer until an hour before the Aug. 2 vote.

Once again, for the record, we were ready, willing and able to cover that second meeting. Unfortunately, they were disorganized, dysfunctional and disordered, so it was called on account of insanity.

Luckily, we get a third and final crack at it next week. (Although you never know, it could get pushed out again, just like the buyout team's "last and final offer" was pushed back a dime.)

And there will be a twist at the next confab. In addition to the increased offer, Silver Lake and Michael Dell are asking that Dell's special committee agree to revise the merger so absentee votes at the shareholder meeting aren't counted against the takeover consortium. It has been reported that about 20% of Dell's shareholders were absent the July 18 vote, creating a roadblock for the private equity buyers.

Um, sorry to say Michael, but we don't think this was the most PC move in your quest to buy the PC maker. All the folks who thought you were stealing the company are not going to be thrilled to hear you are now trying to steal the election.

They may forgive you for another 25 cents though.

-- Written by Gregg Greenberg in New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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