Rogue Trader Story Just Keeps Getting Better

The lastest twist in the Jarome Karviel story, according to Dealbreaker.com is that the French trader remains employed by Soc Gen.

Dealbreaker.com: Shocker: Kerviel Still Has His Job!

Unlike Wall Street, where employees can typically be fired at a moment’s notice, French law requires that the bank must explain it’s decision to fire him at a sit-down meeting arranged in advance. Kerviel is permitted to bring along a union representative, a lawyer or even his mom. The judge in the case, however, has forbidden Kerviel from having any contact with the bank. So it seems that until this order is lifted, Kerviel will keep his job and Soc Gen will remain the bank that continues to employ the guy who lost them billions. (Now that we think about this it does kind of remind us of Wall Street—or at least Bear Stearns.)

Aside from the fact that the high water mark for reporting on this scandal remains the "FRENCH TRADER WAS FORCED TO WORK 30 HOURS A WEEK" from Britain's The Daily Mash, two things have become apparent. First, almost everything I've read so far on this story in the mainstream press has reeked of bullshit, and makes me lean towards the coverup hypothesis. And second, providing that young Jerome was in fact taking positions that were deep in the money until December 30th, and providing that he doesn't end up barred from working in the securities trade, I expect that he will have plenty of opportunities open up for him at firms that would reward such behavior better than Soc Gen.

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Feds drop the hammer on Lululemon, hilarity ensues

Overpriced Hip, trendy, athletic apparel maker Lululemon, who earlier today declared "Um, we conducted our own tests, that's it, yeah! And, um, our seaweed clothing tested as having everything we said they contained. Yeah, that's the ticket!" has now been forced to change their story, as a result of their healthful claims for the VitaSea clothing line coming to the attention of the Federal Government.

Yahoo!: Lululemon to remove healthful claims from seaweed products in Canada

Lululemon Athletica Inc. (TSX:LLL) has agreed to remove all claims alleging healthful benefits from its VitaSea line of clothing products which contain seaweed, Canada's Competition Bureau says.
In a statement late Friday, the regulatory agency said the Vancouver-based yoga wear retailer has agreed to immediately remove all tags and other product notices that contain "unsubstantiated" claims of therapeutic or performance benefits from its seaweed line of clothing in its nearly 40 retail stores across Canada.
Citing the Textile Labelling Act, the bureau said it is illegal to make any false or misleadingrepresentations relating to a garment, including representations regarding fibrecontent.
As well, the bureau cites the Competition Act which says all performance claims must be based on "adequate and proper testing" prior to making claims to the public.

You've got to admire their moxie when it comes to keeping a straight face while making outrageous claims about their products to their clientele, but once the Feds politely point out that they're breaking the law, suddenly they're good corporate citizens again.

You can't make this stuff up!

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Lululemon conducts it's own tests, denies everything

Yahoo!: Lululemon says tests confirm seaweed content in clothes

Lululemon said late on Thursday that lab tests conducted Wednesday night in Hong Kong confirm June test results showing the fabric contains fibers that match content labels on the clothes.
The seaweed fiber releases amino acids, minerals and vitamins into the skin on contact with moisture, Lululemon says.
The Vancouver, British Columbia-based company said SGS SA , a testing and certification group based in Switzerland, runs tests on all its fabrics before each season.

Well, there you have it. Lululemon said their own tests found seaweed. Who are we to doubt them?

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Whole Foods John Mackey may yet prevail

According to people who spoke to the Denver Post's Kelly Yamanouchi, it seems probable that Mackey won't be deep sixed for his seven-year Internet addiction.

The Denver Post: Grocer's CEO not yet out of the woods

Wild Oats Markets Inc., Whole Foods chief executive
John Mackey has emerged from the process with a tarnished reputation and a
securities investigation hanging over him.
Mackey can celebrate that his
deal is clear of an antitrust injunction, but still unresolved are any effects
of his anonymous Internet postings, which have prompted an inquiry by the U.S.
Securities and Exchange Commission and an internal investigation by the Whole
Foods board.
...
Some believe, however, that Mackey's broader business
background will prevail over his postings.
Mackey is "pretty highly regarded
in the industry," said Stan Slater, a professor of business administration at
Colorado State University.
...
The antitrust ruling is separate and distinct from the
SEC inquiry, said Brad Lam, a former SEC attorney in private practice in Denver.
"I think what he was doing with the Internet postings was maybe careless and
a little silly, but I don't think it's going to be actionable" by the SEC, he
said.
"If anything, this is going to be an impetus for the SEC to drop the
investigation and let him get on with running now this bigger combined
operation," Lam said.

Those are fair points, although it still remains to be seen what actually shakes out from both the SEC's and Whole Foods' own internal investigations.

Also unresolved is whether or not the allegations made by the Vegan Vigilante over misconduct in the way Whole Foods management violated British immigration law bear fruit in the mainstream media or not. Scandal, or tempest in a tea pot? That remains to be seen.

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Whole Foods Feeding Frenzy: Vegan Vigilante is back, and he's brought some friends!

Seriously, just how weird can the various schmozzles surrounding organic retailer Whole Foods get?

Dealbreaker's Joe Wiesenthal said it best this morning:
FTC filing tells of 30 Wild Oats closings (Rockey Mountain News)
The Whole Foods/Wild Oats deal has proven itself to be a fiasco shrouded in disaster wrapped in an absurdist farce. First, there was the nonsensical FTC intervention, followed up by word that CEO John Mackey bragged about how the deal would make the market less competitive. Then there was the whole message board affair, which needs no reminder. And now the FTC has "accidentally" (we have our doubts) let slip information on how many Wild Oats stores Whole Foods plans to close should the deal go through. Apparently that part of the document with this information was supposed to be blacked out, but as numerous companies have learned, it's really easy to mess up blacking out part of a document.

In addition, there's the nascent scandal brewing around allegations made by the Vegan Vigilante* that Whole Foods knowingly dodged British Immigration Law while setting up their Kensington flagship store. The whole sordid mess can be read in the comments sections of the relevant posts here.

How much would you pay for all of this? Don't answer yet, because there's more! This morning persons unknown, maybe the Vegan Vigilante, maybe someone else deluged my inbox with more corroboration and invective.

Check this out:

Natural Choices UK: Is Whole Foods Market’s John Mackey up to his old tricks?
naturalchoices.co.uk and newconsumer.com both had comments posted on them by a poster identified as rohadeb, the same alias used by John Mackey on Yahoo Finance to denigrate his competitors and boost his own company.
The comment posted on both sites under the alias rohadeb made allegations that senior management in the US with responsibility for the UK Whole Foods Market roll out have instructed US employees to lie to the UK immigration service and thus avoid unnecessary expense for the company. In the comment posted to naturalchoices the manager was actually names as one David Lannon, identified on the Whole Foods Market site as Vice President with responsibilities for the North Atlantic region. The message on newconsumer did not name an individual, saying rather “region president overseeing the London Whole Foods Market”.


Note that Whole Foods has already issued a press release to the UK website Natural Choices spinning the story out:

Official Statement sent to Natural Choices by Whole Foods Market
“Whole Foods Market is a well respected employer throughout the US and now in the UK. It fully complies with all UK and US immigration laws regarding the employment of its Team Members.
We have invited several Team Members to travel to the United Kingdom for varying periods of time to assist us with post-opening activities such as instilling our company culture and sharing best practices and knowledge. These Team Members will assist with the promotion of our quality and merchandising standards in accordance with our brand image. This assistance may consist of demonstrating business practices, techniques and strategies for excellence in retailing the Whole Foods Market way.
The training and support that these Team Members provide will ensure that the new store complies with the Whole Foods Market brand and standards in relation to their relevant department procedures. This training, which is specific to our organisation and to our operations in the US, is not readily available in the UK, as we have no current operations running of a similar scale in the UK.
All expenses related to the trip are fully covered by Whole Foods Market/Fresh & Wild including airfare, lodging and per diem expenses as permitted under UK law. Visiting support Team Members continue to be paid from the United States and they are not in the UK to undertake any productive work. “

You know that once a besieged company starts issuing denials that there does seem to be a there, there.

In the words of the late, great Hunter S Thompson, "When the going gets weird, the weird turn pro." Where will this end? Damned if I know, but it looks like Whole Foods is determined to present us with dinner and a show.

*as an aside, I have been in private correspondence with the original Vegan Vigilante, who has put me in touch with the US journalists who are working on the story. Ironically enough, he has chosen "John Mackey" as his pseudonym and freemail email address. Cute.

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Some people feel sorry for Whole Foods CEO John Mackey

This weekend in the New York Times, Christopher Caldwell felt bad for embattled Internet superstar CEO John Mackey.

NYT: Not Being There

“Granola-eating street fighter” is the unimprovable description that BusinessWeek.com recently bestowed on John P. Mackey, the chief executive of Whole Foods Market. There certainly aren’t many people like Mackey, a vegan who has ruthlessly built Whole Foods into a $6 billion chain of organic groceries. But there are a lot of people who, one way or another, share his recent predicament.

Caldwell's position is that sure, Mackey should have known better, but shooting your mouth off on the Internet happens to the best of us, so how bad can it be?

We’re not too good at making these decisions online. We feel as if we’re chatting in a barroom or a dining room, but we may be held accountable as if we were in a courtroom or a newsroom. Without a physically present audience that we can see or hear, we are left free to imagine our audience however we wish. When we do so, it’s easy to delude ourselves that what we’re talking about determines whom we’re talking to.

That's true, as far as it goes. But there's a huge obstacle called Fiduciary Duty that makes all the difference between someone like myself making fun of Blu-ray, or arguing about Tabata Intervals on a bulletin board devoted to fitness and weightlifting, and someone like Mackey engaging in conversation that cheer leads his company's stock, and belittles his competitors.

He really would have been better off arguing about the intricacies of veganism.

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Whole Foods John Mackey may or may not be in Big Trouble

An update: I've been contacted via email by the putative Vegan Vigilante who has been sharing a potentially embarrassing tale of organic, touchy-feely grocery retailer Whole Foods and some poor decision making they exhibited when moving into the United Kingdom.

I've been put in touch with a journalist for the WSJ who is apparently working on the story. Since the Journal has a lot more lawyers than Lee Distad's Professional Opinion, our plan is to bide our time, and totally ride the WSJ's coat-tails once the story breaks.

In the meantime, you can catch up here, with the story so far.

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Whole Foods UK Whistleblower, redux

The Vegan Vigilante* who's been dishing here on embarrassing details of an alleged labor foofrah in Whole Foods' UK operation left another note in the comments section last night.

Whole Foods UK whisleblower STRIKES AGAIN!
The transition from the US market to the UK market has not been the seamless operation one would expect from the darling of the natural food industry in the United States. First Tesco accomplished a minor coup by trade marking the Whole Foods label, even though Whole Foods Market had had a presence in the UK for 3 years with the Fresh and Wild stores. Then the new 80,000 square foot Kensington was months late opening and is bleeding red ink. Although the nearly 200 store chain purports to be the organic alternative, only 10 percent of its product mix in the UK is certified as such. Recently it was reported that local sourcing regulations were ignored by Whole Foods when calling certain produce local. Now Whole Foods is in an immigration row. It seems that a scheme was cooked up in the North Atlantic Regional Office of Whole Foods Market Boston office to make the Kensington store look more profitable than it really was. The plan started by having company Team Members from the States come to the UK to prepare for the opening of the huge Kensington store. The Team Member's home store in the States would pay the salary and expenses of the visiting employee while they were in the UK. Visiting workers in the UK are also required to get a work permit through immigration before entering the country. Whole Foods at first complied with the work permit law but then decided the 1400 pound per employee fee was too steep for the chain that has been dubbed "Whole Paycheck" by value shoppers in the U.S.. North Atlantic region president David Lannon cooked up the scheme whereby Whole Foods employees from the states entered the UK on tourist visas to avoid the work permit fees. Although the employees salary, transportation, lodging and food costs were paid while they were in the UK and employees were required to put in a regular 8 hour day while at the Kensington store they skirted the fee by claiming they were not doing any productive work. The problem is that the properly permitted predecessors from the States and the un-permitted reinforcements did the same kind of work in the UK. When word of this scheme was revealed to the press the usually sanguine Whole Foods staff became tight lipped in a hurry. Kensington Store Team Leader Rick Bonin refused to comment on the scheme. Laura Derba, the North Atlantic region vice president instructed all Whole Foods staff to not speak about the issue to the press. The public relations office of Whole Foods is claiming that the scheme is valid because Whole Foods employees in the states were engaged only in training programs while in the UK and did no productive work in the Kensington store. Visiting employees from the States offered no training seminars or workshops to the UK Whole Foods workers at the Kensington store however. There are currently workers from the States at the Kensington store who have reportedly been engaged in productive work during their stay in the UK. This type of story can not bode well for the company. Saving a few quid at immigration in a country where there is a strong trade union presence who will turn this into a political football is truly being penny wise and pound foolish. It does not help that Whole Foods has imposed a news blackout on employees who had been in the UK as it begs the question "What do they have to hide?" woodwork

This account is long on detail, including naming names, and still short on corroboration (not to mention line breaks). I still haven't seen this story break in the Old Media, as VV promised.

My grandpa used to say "Never let the truth spoil a good story." Unfortunately that doesn't hold true for corporate scandal. If this story is on the level, someone here needs to throw us a bone here at Lee Distad's Professional Opinion: a bone with some corroborative meat on it.

Vegan Vigilante needs to drop me a line at leeUNDERSCOREdistadATyahooDOTcom and let me know, confidentially, obviously, how they know what they know. You know, like journalists do. I may be New Media (Meta New Media, technically, but now is not the time to get into that), but we at Lee Distad's Professional Opinion have standards.

*I'm not 100% crazy about the name Vegan Vigilante either, but vis a vis the Name That Whistleblower Contest, none of you are exactly setting the world on fire, either.

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Whole Foods UK whisleblower STRIKES AGAIN!

Last weekend, an anonymous commenter dropped a tip into our laps at the Global Headquarters of Lee Distad's Professional Opinion about another storm brewing at beleaguered new age grocery chain Whole Foods.

Anonymous said...

More bad news for Mr. Mackey. It seems that Whole Foods employees from the states who were sent to the new Kennsington store in London on assignment were instructed to misrepresent their status as visiting workers and instead claim observer status in order to avoid the hefty work permit required by UK immigration. The problem is not all workers claimed the same status, yet all filled the same niche as temporary workers. I don't know who is in charge of the London stores but it can't look good for corporate headquarters in Austin.12:53 PM

Despite being a fan of scandal and turpitude, I called the allegation into question, based on a complete and total lack of corroboration from other sources. I even went so far as to publicly question whose sockpuppet this might be.

Well, in the wee hours (22:10:18 PDT, specifically) last night, the anonymous tipster struck again:

Anonymous said...
Lee

Your confirmation should hit cyber space before Friday. The North Atlantic Region office of Whole Foods was in damage control mode Wednesday, all staff who had been to the UK were instructed to not speak to the press. There is real fear and trepidation amongst the Whole Foods Staff because Whole Foods is claiming they send staff, but not to do productive work. Staff claim they are going to the UK as tourists but put in a regular 8 hour day. That begs the question of why they are sending so many employees to the UK if they are not doing productive work.
11:10 PM

Wow. Just, wow.

Whoever the whistleblower is, they seem determined to kick over this particular anthill. So, is Lee Distad's Professional Opinion special, or is this story being salted all over the blogosphere? As of yet, I haven't seen corresponded anonymous commentary elsewhere, which makes me feel like I'm being wound up.

While we wait to see if their tip plays out in the media, we've got two tasks ahead of us:

1) Speculation on who the anonymous whistleblower is. My guess is that John "Rahodeb" Mackey is trying to atone for past sins of disclosure by demonstrating self-sabotaging behaviour. Pretty far-fetched, but it makes a good story, no?

2) Coming up with a catchy nickname for this anonymous whistleblower. The first ones that have popped into my head were total crap. Feel free to make suggestions in the comment section below.

Let's make it a contest. If we have a clear winner for the whistleblower's nickname, I'll see about some sort of nominal prize, in addition to the fame that will accompany you (or your sockpuppet) if this thing blows up in the media like our new contact seems to think it will.

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Whole Foods fracas in the UK? Hot tip or anonymous muckracking?

Up until yesterday, it had been All Quiet on the Whole Foods Front. Then the following anonymous comment landed in my Inbox:

Anonymous said...
More bad news for Mr. Mackey. It seems that Whole Foods employees from the states who were sent to the new Kennsington store in London on assignment were instructed to misrepresent their status as visiting workers and instead claim observer status in order to avoid the hefty work permit required by UK immigration. The problem is not all workers claimed the same status, yet all filled the same niche as temporary workers. I don't know who is in charge of the London stores but it can't look good for corporate headquarters in Austin.
12:53 PM

The allegations made in that comment sound wonderfully scandalous. However, there's one small problem: I can't find any corroboration. A half hour searching the news feeds, plus Google and even (gasp) Yahoo! Search has turned up nothing.

Is it true, or is someone anonymously trolling blogs and internet message boards spreading misinformation about WFMI? If the latter, the irony is too obvious to need mentioning.

So, the two questions I've got are: is the story true, and whose sockpuppet is Anonymous 12:53?

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Investors look to send Whole Foods' John Mackey packing

It's old news, and if it was produce, it wouldn't be on the shelf anymore, but I've been busy and am playing catchup.

NY Post: FIRM ASKS MACKEY TO LOG OUT
In a letter sent to Whole Foods' lead independent director, CtW Investment Group urged the board to name an independent chairman immediately to rebuild trust with government regulators and shareholders in the wake of the scandal.
CtW, a branch of labor union coalition Change to Win, whose members own about 900,000 Whole Foods shares, applauded the board's decision to appoint a special committee to look into Mackey's shenanigans.
But the group urged the company to go further to see if he's fit to remain as CEO.

Needless to say, this topic has already been bludgeoned all over the Flogosphere in my absence, but let me just say that it's good to be right. I commented earlier (as a member in good standing of the Commentariat) that Mackey will likely get the sack, and it feels like events are moving in that direction.

Really, what else is there to say? He did it. He said that he did it. He's cast a serious cloud over the perception that he can make good decisions. We've already been through the pitiful attempt at spin control, followed by the equally pitiful insincere apology. We're all pretty much hanging around waiting for the Endgame at this point.

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The knives are coming out for Whole Foods' John Mackey

Between news of his forthright apology in the face of an SEC investigation:

Reuters: Whole Foods CEO sorry for anonymous Web posts
LOS ANGELES (Reuters) - The chief executive of Whole Foods Market Inc. (WFMI.O: Quote, Profile, Research) apologized to shareholders on Tuesday for anonymously posting comments about his company on the Internet as the organic and natural foods grocer said the U.S. Securities and Exchange Commission had launched a probe into the matter.
News of the SEC probe comes a week after court documents filed by the U.S. Federal Trade Commission revealed that Whole Foods Chief Executive John Mackey posted messages on a Yahoo! chat forum under an alias for years.
In the postings, Mackey talked up his company while predicting a bleak future for Wild Oats Markets Inc. (OATS.O: Quote, Profile, Research), the rival his firm is trying to acquire.
"I sincerely apologize to all Whole Foods Market stakeholders for my error in judgment in anonymously participating on online financial message boards," Mackey said in a statement on Tuesday. "I am very sorry and I ask our stakeholders to please forgive me."

And reports of Whole Foods conducting their own internal investigation:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a04wEySMHHFA&refer=home
Whole Foods Market Inc., the largest U.S. natural-foods grocer, said its board formed an independent committee to investigate postings made on financial message boards by Chairman and Chief Executive Officer John Mackey.

It looks more and more likely that Mr. Mackey will be required to fall on his sword for the good of the company. Bear in mind that I already called this. Not that I needed to be Faith Popcorn to see it coming.

I have no particular axe to grind, and bear John Mackey no ill will. However, the line is right there, spelled out for all to see. If you screw up, you have to accept the consequences. Like Kevin Spacey's grasshopper king said in the Pixar film A Bug's Life: "First rule of leadership is that everything is your fault!"

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Did Whole Foods CEO John Mackey troll my blog?

Damned if I know, but consider this: on Saturday, an anonymous poster left the following comment on this news post on the Rahodeb scandal:

Anonymous said...
Balderdash. So what. I like Whole Foods--the service, the quality of foods, and, yes, the atmosphere.I can buy fresh Whole Foods or Kroger "Old Foods." Example: gladiolus at $3.99 (fresh) at Whole Foods at $3.33 (on the verge of decay) at Kroger.Let me say: fresh is worth $.66.

Aside from the fact that it's a total non-sequitor to the issue at hand, it also doesn't match any of the style or syntax from the Usual Suspects around here who post comments anonymously.

That same day, Google Analytics tells me that I had a visitor from El Paso, Texas, down the road from Whole Foods' Austin head office, who was referred here by a link from Herb Greenberg's MarketWatch blog on the same subject.

Coincidence? I think not.

So, in good muckraking tabloid fashion, I'll put it this way: I don't know that John "Rahodeb" Mackey trolled Lee Distad's Professional Opinion, but I don't know that he didn't!

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Chinese product scandal now a full-blown panic

BBC: Fifth of China goods sub-standard
Nearly a fifth of goods made and sold in China have been found to be sub-standard, Beijing has revealed.
The worst problems were found in canned fruit, dried fish and fruit drinks, a food inspectors' report said.
China has pledged to take action to improve its food and drug industry after a series of safety scares aroused domestic and global concern.
The US has already banned or issued warnings over several goods from China, including seafood and toothpaste.

This same message is being screamed, with varying levels of hysteria, all over the media now.

In my inbox this morning from one of my contacts at a major japanese CE brand:

Lee,

That's a news flash. Think not. Anyone in the CE industry could have told the BEEB that ages ago. Think that they would have paid us for that info?

I'm thinking of making up t-shirts that say "I was hating on Chinese consumer goods before it was trendy!"

Where do you suppose I can get them made cheaply?

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Network Marketing Is For Suckers And Schlubs

If you like scandal, be sure to check out forensic accountant Tracy Coenan's ascerbic blog posts about network marketing firm Usana.

FRAUDfiles blog: Usana’s definition of “misinformation”

Misinformation they say? Might I remind everyone that Usana’s own documents and/or own executives admit to the following:
72.2% of all distributor commissions are paid to the top 2.6% of commission receiving distributors, meaning everyone else gets next to nothing.
66% of Usana associates receive no commissions at all
87% of Usana distributors don’t even earn enough commissions to pay for their required minimum monthly purchases
The average commissions paid to Usana distributors decreased from 2005 to 2006

It's never pretty when the merry-go-round breaks down.

I have an especial contempt for network marketing. Regardless, when relentless fraud buster (and convicted felon, as he would insist that I remind you) Sam E Antar asked me if I wanted to be part of the blogosphere dogpile on Usana's sinking ship, I declined.

Why? Exactly because of my especial contempt for network marketing. With so many windmills to tilt at in this world, I have other priorities. Looking for sleaze and fraud at a network marketing company is like looking for hay in a haystack. Besides, as I told Mr Antar, my windmill of choice is corporate incompetance rather than corruption.

I will go on the record as saying that I have been propositioned, "recruited" and pigeonholed by network marketing schlubs on so many occassions that I eventually developed a system for getting rid of them. I call it "being rude and mocking them."

By and large my regular readers are well-educated, accomplished professionals, and have an effective bullshit filter, which is why they remain my regular readers. For any of the rabble who Googled their way here to get on an MLM soapbox, and who I know are going to try and spam my comments section with testimonials and passive-aggressive threats, let's get a few things straight:

You don't "own your own business" and you aren't "your own boss."

Your "business plan" creates no value for anyone except the people at the top.

Many MLM'ers bounce from one company to the next, chasing the rainbow, looking for the scheme that will make them rich. I've witnessed this firsthand amongst one or two desperately deluded family members. Wake up.

In the case of "financial freedom" schemes, here's a hint: real stockbrokers and real financial planners at real firms are too busy brokering stocks and managing portfolios to troll shopping malls and social functions in order to recruit new stockbrokers and financial planners. If you were recruited straight out of selling shoes at Footlocker to be a "financial planner" you might want to second guess your career arc.

If, after reading this, anybody still feels obligated to post a comment calling me a "dream stealer" or whatnot, fine. Just don't be surprised when I exercise my mandate to muzzle and ignore you. You know, like almost everybody in your personal life has done by now because of your unhealthy obsession with your "business."

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