RealMoney.com : Herb on TheStreet Facts Get Blurred in 1-800-Contacts Rally
By Herb Greenberg
Senior Columnist
04/04/2002 01:16 PM EST
Rants:
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Message board melee: Hard to believe, but a message board post apparently helped goose the stock of 1-800 Contacts (CTAC:Nasdaq - news - commentary - research - analysis) . The post in question was headlined, "FTC rules in favor of CTAC." The post then provided a link to an Federal Trade Commission letter to the state of Connecticut, which is reviewing its regulations regarding the sale of contact lenses.
But a closer look shows the letter is not from the FTC. It's from the staff of the FTC, which rules on nothing. Rather than rule in favor on 1-800 Contacts, the comments in question are merely a statement of the staff's position on the sale of contact lenses.
At issue is whether a prescription, or the verification of prescription information with the doctors, should be required. This has been a hot issue surrounding Contacts. In its 10-K, Contacts says, "If the Company is unable to obtain a copy of or verify the customer's prescription, it is the Company's general practice to complete the sale and ship the lenses to the customer based on the prescription information provided by the customer."
By contrast, the FTC staff, in its letter to Connecticut, says, "The evidence suggests that the health concerns motivating the prescription requirement are satisfied if the contact lens seller receives a valid prescription, however that information is transmitted."
How that says the "FTC rules in favor of CTAC" is beyond me.
But then again, so is much of the garbage floated on message boards.
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Strange bedfellows: Remind me (once again!) never to invest in companies in which Take-Two (TTWO:Nasdaq - news - commentary - research - analysis) and/or its execs get involved.
An item here recently noted how former Take-Two co-Chairman Barry Rutcofsky last year became a director of Suprema Specialties , which filed for bankruptcy reorganization in February after its offices in New Jersey were raided by "representatives of government agencies."
Now hear this: Since 1999, Take-Two has been an investor in eUniverse (EUNI:Nasdaq - news - commentary - research - analysis) , an operator of Web sites and email newsletters that provide entertainment content. Along with the investment, Take-Two Chairman Ryan Brant joined eUniverse's board. Why, he's on the audit committee!
Why care? As Bloomberg's Dave Evans reported the other day, the SEC is investigating ex-stockbroker Rafi Khan, who has been banned from the securities industry, for fraud in promoting eUniverse and three other companies. According to the Bloomberg story, which quotes the SEC complaint, "Khan allegedly issued 'buy' recommendations on the companies in exchange for stock or warrants issued by the companies to Pakistani firms owned by Khan's brother-in-law."
It should be noted that in recent months Take-Two has been bailing out of eUniverse and now owns 113,000 shares. At its peak, the company owned more than 2.2 million shares.
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Meet and greet: Join me, Cramer, Kass and a bunch of other fine folk May 2-4 at TheStreet.com's "Advanced Disciplines & Strategies for Running Hedge Funds" conference at the Doral Golf Resort & Spa in Miami. I'll be giving my spin on the world, but when I'm not doing that I'll just be hangin' for two days in my native haunt with not much else to do but get to know you. Seriously, I will have a lot of time on my hands to, hopefully, make some new sources! Look forward to seeing you there. |
