There are few things life more stupid than pissing off Senator Elizabeth Warren (D-MA). Yet Wells Fargo CEO John Stumpf managed to do just that with his prepared, yet sometimes absurd remarks that were carefully crafted for his much deserved beating by the Senate. That beating came after the bank had to cough up a $185 million fine because employees opened up more than two million unauthorized checking accounts and credit cards. Senator Warren said, among many other colorful things, that Stumpf demonstrated “gutless leadership” and called for him to be personally criminally investigated by both the Department of Justice and the SEC. Yowza. Stumpf did attempt to explain that Price Waterhouse Coopers was brought in to review the accounts in 2015. The problem is that Senator Sherrod Brown (D-OH) wondered very loudly why Wells Fargo didn’t do that immediately after a scathing L.A. Times article came out exposing the scandal way back in 2013. In the meantime, Carrie Tolstedt, who headed the retail banking business that oversaw the fraudulent accounts, retired in July with $125 million from a previous stock compensation. Of course, the bank’s top executives attempted to point the finger at lower level employees who made between $35,000 – $60,000 a year. Wells Fargo fired 5,300 employees in the last few years for improper conduct tied to the fraudulent accounts. Senator Bob Menendez (D-NJ) made sure to ask Mr. Stumpf how much he took home last year: $19.3 billion was the answer. John Stumpf is still very much gainfully employed and is apparently “deeply sorry.”
Give a shot…
West Virginia joins the list of states gunning for Mylan ever since the company hiked the price of their life-saving EpiPen drug to $600 for a 2-pack. Mylan argues that it recoups less than half of that $600 Epipen price tag yet the drug accounts for 40% of the company’s operating profits. The state’s attorney general, Patrick Morrisey is going after the drug-maker, filing a petition to find out information that might just lead to some very unpleasant Medicaid fraud charges for Mylan. The subpoena could determine whether Mylan underpaid on rebates so that it could participate in the state’s Medicaid program. And while Mylan has yet to comment, its CEO Heather Bresch has a very unpleasant date planned for Wednesday with the House Committee on Oversight and Government Reform. You might have heard that her father is Senator Joe Manchin (D-W.VA) Awkward. Also problematic, in terms of West Virginia’s Antitrust Act, is how Mylan sued Teva Pharmaceuticals for patent infringement when the latter wanted to make a considerably cheaper, generic version. The two companies settled but in the meantime, blame it on the FDA for not yet approving the generic version. This latest investigation, by the way, is completely separate from New Attorney General Eric Schneiderman’s investigation.
Nothing to sea here folks….
More rough waters for SeaWorld Entertainment (SEAS) as the theme park company hit a new low today of $11.77. While it did rebound a bit, the company still plans to issue its last dividend – 10 cents a share – on October 7, which is down from the 21 cents it had previously issued. But after that, the dividend will be put on hold…indefinitely. Instead, SeaWorld will use that money to buy back shares as the company stares at a future without killer whales in captivity. Starting next year, SeaWorld in San Diego will bid a salty farewell to its Orca shows, with San Antonio and Orlando following suit in 2019. The brutal publicity from the 2013 Orca documentary, Blackfish, has put a significant damper on earnings and attendance at the theme parks, with visitors down 8% to about 6 million for the year. Interestingly, SeaWorld thinks the drop in attendance has more to do with other factors like Tropical Storm Colin and a shift in holidays. Whatever the real reason is, the fact remains that revenue was down 5% to $371 million from last year’s $392 million for the same period. Add to that a drop in profit of $5.8 million from $17.8 for the same quarter last year and you’ve got yourself a hot fiscal mess.