Faced with a growing controversy over its $1 million stock-picking contest, General Electric Co.'s (NYSE: GE) CNBC did what companies faced with a crisis always do: release a cryptic statement late on a Friday announcing how it plans to clean up the mess.

In CNBC's case it's the hiring of Stanley Sporkin, a former federal judge, former CIA general counsel and former SEC enforcement director along with computer security firms Symantec Corp. (NASDAQ: SYMC) and KSR Inc.'s Neohapsis.

CNBC obviously would like the public to forget how badly it botched "The Million Dollar Portfolio Challenge." BusinessWeek uncovered evidence of cheating that was patently obvious as contestants took advantage of a software flaw. This promotion helped push CNBC.com to become one of the top sites for business news.

But the cable channel is pressing on with the promotion. The company was supposed to declare a winner on July 8, but has vowed not to do so until the investigations are complete. CNBC's problems may not end there.

BusinessWeek reported that finalist Joe Dondero, who didn't take advantage of the software flaw, has been accused of manipulating trading in thinly traded equities in the real stock market to enhance his performance in the contest. He also has a track record of getting in hot water with regulators, including the NASD, the magazine said.

CNBC's attempt to sweep this fiasco under the rug is unfortunate. The channel did the right thing, though, by hiring outside consultants to investigate what happened and hopefully will learn how to avoid future mishaps like this in the future.

At this point, the network should follow the lead of my former employer TheStreet.com, which scrapped a similar promotion after cheating was discovered. These contests are bad ideas anyway.

The last thing investors need is encouragement to chase short-term profits

The cheating on CNBC's "Million Dollar Portfolio Challenge" was so blatant that anyone with even the tiniest knowledge of the stock market could have sensed that something was seriously wrong.

BusinessWeek points out that the top finalists in the contest averaged returns of 45% during the first nine days of the final round which stretched out annually would equal 1,200%. The odds of someone being able to generate these sorts of results legitimately are pretty slim. Having more than one contestant show these returns should have immediately set off alarm bells at the General Electric Co.- (NYSE: GE) owned network.

This wasn't a difficult flaw to exploit. The magazine reports that all these wannabe Warren Buffetts did was go the CNBC Web site and hold off executing the trades until after the 4 p.m. close by keeping their Web browsers opened. They wound up getting the pre-close price for stocks that went up in after-hours trading.

CNBC, which is offering $1 million to the first-prize winner, denies that the controversy surrounding the contest has damaged its credibility. "Why would it?" said Kevin Goldman, a spokesman for CNBC in an interview, adding the company launched an investigation as soon as the problems were brought to its attention though BusinessWeek said whistleblower Jim Kraber was initially rebuffed. He declined to release the names of the parties CNBC has hired to ferret out these miscreants.

The "Million Dollar Portfolio Challenge" was a successful promotion that helped make CNBC.com of the top business news sites fairly quickly. Whether the cable channel is too clever for its own good remains to be seen.