High-flying apparel retailer Lululemon Athletica (NASDAQ: LULU) is coming under scrutiny of late. First, the New York Times reported on questionable products claims, and then Herb Greenberg took a hard look at CEO Bob Meers' resume claims, warning that "If you haven't guessed, this company is now firmly on my radar."

Brenda Buow of the Globe and Mail takes a look at the company: its rapid growth, unique products, and unique corporate culture that incorporates New Age concepts like the Law of Attraction. The main challenge for Lululemon seems to be converting its huge success in Canada into the U.S. market -- a move that many companies have failed at.

To be sure, there's a lot to like about Lululemon; the clothing is wildly popular and the company appears to be carving out a strong niche.

But what about the bear arguments? Many Lululemon shareholders have dismissed the red flags Herb Greenberg has raise about resumes as immaterial. And they're absolutely right: Whether Meers left Reebok in 1998 or 1999 will have no effect on Lululemon's future growth.

But with a fast-growth company, management integrity is of paramount importance -- material importance. There appear to be good reasons to doubt Meers' integrity, and his apparent deflection of Greenberg's questions is another red flag.

In his latest blog post, Herb Greenberg asks whether Wall Street should hand over its bonuses to victims of the subprime mess.

Of course, it's sort of academic -- kind of like asking whether Michael Vick should donate money to the ASPCA. Fat chance. But anyway, it's an interesting philosophical question, so I'll give it a shot.

The idea that Wall Street executives should give some of their bonus money to "victims" of the subprime mess seems to be based on a lack of understanding of what actually happened. The housing bubble and increase in subprime lending and decline in the quality of the loans was a happy conspiracy (for awhile anyway) between lenders, Washington, and people who were eager to own their first homes.

If you want to get Patrick Byrne's take on naked short selling and the alleged conspiracy (involving class-action lawyers, hedge funds, and journalists) against his company, Overstock.com (NASDAQ: OSTK), then Deep Capture, the Movie is a good place to get it.

In the 45th slide of the presentation, to provide evidence of the journalistic conspiracy, Mr. Byrne plays a clip of former New York Post business editor Dan Colarusso speaking to Herb Greenberg, Joe Nocera, and Dave Kansas: "When I think of Patrick Byrne ... We have barrels of ink and stacks of money and all the resources in the world at our disposal, legal and, indeed our media, to crush him."

Is this indicative of a conspiracy? Speaking on Mad Money with Jim Cramer about Mr. Byrne, Herb Greenberg said that "the real conspiracy, if there's a conspiracy, is a conspiracy by these people to silence the critics."

Exactly. And here's a tip for Mr. Byrne: Journalists tend to be big believers in free speech. When you attack their ethics, attempt to intimidate them into silence, and an employee of your company sets up a website to smear them -- that angers journalists, and they jump to each others' defense.

Was there a conspiracy of journalists against Patrick Byrne? I seriously doubt it. But Byrne's efforts to silence his critics have made him an enemy of journalists and lovers of the First Amendment everywhere. Maybe that's the conspiracy.

Ten days ago I had the opportunity to appear on CNBC's Power Lunch program hosted by Bill Griffith. On the opposite side of the interview was Herb Greenberg of MarketWatch and more recently, a frequent contributor to CNBC. The question came up about what stocks or sectors are actually doing well and might see good earnings for the September quarter. My response was the technology sector was actually enjoying some excellent times.

Herb Greenberg asked if I thought this was the crowded trade, as "everyone" appears to be in tech? Having only seconds to respond I explained that results appear to be in order and technology is a truly global play. With the chance now to really think about it and respond hopefully a bit more eloquently I would say "of course tech is the crowded trade. It is suppose to be." Why?

The markets have a way of segmenting which sectors are achieving stated expectations and of course, which ones are not. Markets do this very quickly. Capital will flow to where growth and visibility present themselves and certainly technology is becoming more visible. The crowded trade for 2005/2006 was in energy as we witnessed nearly obscene profits generated from the major oil companies. If Exxon Mobil Corp. (NYSE: XOM) earns under $9 billion in a quarter now, that will be viewed as a major disappointment!! But the point is investors dollars flowed to where the action --or the earnings were.

MAJOR PAPERS:

• Alain Dassas has been named CFO of Nissan Motor Company (NASDAQ: NSANY), filing a position that has remained open for four years, reported the Wall Street Journal. Dassas runs the Formula One race car team at Renault, which has a 44% stake in Nissan.

OTHER PAPERS:

• Goldman Sachs Group (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup Inc (NYSE: C), Lehman Brothers Holdings (NYSE: LEH) and JP Morgan Chase and Company (NYSE: JPM), The banks involved in the underwriting of the TXU Corporation (NYSE: TXU) buyout by Kohlberg Kravis Roberts and TPG, have offered to pay the $1B breakup free to convince the private equity buyers to back out, according to the U.K. Times.
• GlaxoSmithKline (NYSE: GSK) is currently looking for someone to succeed CEO Jean-Pierre Garnier, who will retire next May, and investors are thought to want a CEO that will 'radically overhaul' the company and possible break it up, reported the Guardian.
• The Seattle Times reported that Boeing Company (NYSE: BA) is expected to announce that the first flight of its 787 Dreamliner jet will be delayed at least until late October, according to an inside source.

WEBSITES:

• Herb Greenberg noted in his MarketWatch blog yesterday that International Rectifier Corporation (NYSE: IRF) disclosed on Friday after the market close how it was committing fraud by having a subsidiary hide products already booked as revenue in "off-books warehouses."

According to The Wall Street Journal (subscription required), Dell (NASDAQ: DELL) is "finally getting back to business" after it was forced to restate four years worth of financials because of aggressive accounting that was done, in some cases at the request of "senior executives," to meet financial targets.

Shares are up since the restatement. With the exception of the always-vigilant Herb Greenberg, Dell's restatement has gotten very little coverage in the financial press. The dollar amount of the restatement can be quantified easily -- $150 million. That's less than 2.5% of the company's current market cap. So this is hardly Enron.

But the larger point -- and one that seems to be getting little attention -- is what this matter says about the corporate culture at Dell, and the company's internal controls. This fraud -- "adjustments to various reserve and accrued liability accounts ... so that quarterly performance objectives could be met" is fraud -- went on for four years.

Hopefully Dell's board and management are taking the steps to improve the company's corporate culture to one of integrity. That's the real issue here, and it's a vital part of "getting back to business."

Nautilus (NYSE: NLS) President and CEO Greg Hamman resigned abruptly, with no explanation given in the company's press release. Hamman will also be giving up his board seat, and will be replaced in his leadership role by Robert S. Falcone, the company's current lead independent director, on an interim basis.

Sherborne Investors has accumulated just under 20% of the company's shares and, given its activist background, it seems likely that the fund's position in the stock contributed to Hamman's departure.

Also intersting, the company has attracted the scorn of watchdog Herb Greenberg for its harsh treatment of an analyst who had the nerve to give the stock a sell rating. The stock's performance in recent years tells you all you need to know about the wisdom of the analyst's sell-call, and also the performance of the company's management.

But there may be value here. Nautilus is trading close to its book value with a low price-earnings multiple and a firm like Sherborne may be just what is needed to shake things up.

I would consider buying Nautilus here. The party has already ended for one overpaid CEO, and more changes are hopefully coming. There is no question that the Nautilus brands, including BowFlex have value.

The always-insightful Herb Greenberg had a terrific blog post today that everyone should read: Fools Rush In: Too Smart for Their Own Good.

The markets are jittery, and it seems that investors' fears are being realized: The problems in the credit markets weren't contained to the subprime sector. Why did it happen? As Greenberg writes, and he's 100% right, everyone was way too confident. Consumers thought they could handle debt loads they couldn't, and lenders thought they could too. Banks and funds thought that by bundling together loans into collateralized debt obligations, everything would work out peachy. Right. And if you believe that, I have a hedge fund you might be interested in: Long Term Capital Management.

To paraphrase the title of one of my favorite business books, genius fails -- with great frequency actually. And if something seems like a dumb idea, it usually is. Couldn't people figure out that lending people money to buy houses (or handbags or yachts) that they couldn't afford wouldn't end well? Packaging them into CDOs didn't make it any smarter.

Greenberg writes:

Happy days were here again, and Wall Street's wizards had figured out yet another fail-proof magic potion that would let this party last forever.

Unfortunately for them and everybody else: While it was supposed to be fail proof, the magic potion wasn't fool proof. And as it turns out, from Wall Street to Main Street, the fools there were aplenty.

Yup.

While the shareholders and board of directors at at Whole Foods Market (NASDAQ: WFMI) wish CEO John Mackey would pipe down, and the board at Overstock.com (NASDAQ: OSTK), if it exists, seems indifferent to CEO Patrick Byrne's Regulation FD-flouting rants, Herb Greenberg has a nice WSJ column (subscription required) on executives who take a different approach. To borrow a line from Calvin Coolidge, these companies have decided that nothing they don't say will do them any harm.

The piece talks about a few thinly traded, closely held companies, several of which list their shares on the OTC markets, which tend to be highly illiquid and provide little exposure. These companies don't hold regular conference calls and don't present at investor conferences, but some have actually provided investors with very strong returns.

The highlight of the column is a company called Expeditors International (NASDAQ: EXPD), a transportation and logistics business. Expediters responds to shareholder inquires by filing 8-Ks with the SEC providing pithy, and often bitchy, responses to questions. The latest series is one of the strangest 8-Ks I have ever seen.

The always-insightful Herb Greenberg raises an interesting point in his latest Weekend Investor column for the Wall Street Journal: "Face it: Nobody cares much about accounting scandals anymore."

He uses the situation at International Rectifier (NYSE: IRF) as an example. After the company reported that it had fired its chief financial officer, the stock went up. The shares are currently trading at about the same price they were at before the company reported "accounting irregularities" on April 9.

Investors may have be correctly predicting that the accounting issues aren't huge -- any restatement of earnings may not be material enough to effect the value of the company.

But that's not really the point. As Greenberg writes, "Still, the market's indifference to possible fraud, no matter the size, is astounding -- especially since, at times, aggressive behavior reflects a company's culture."

Now that is precisely the point. I'm with Jim Cramer on this one: When a company's CEO or CFO resigns unexpectedly, sell the stock. If a company announces "accounting irregularities" and the stock doesn't tank on the news, take it as an opportunity to get out: Shooting first and asking questions later would have saved investors a lot of pain at companies like Enron, WorldCom, and, for you history buffs out there, Zzzz Best and Crazy Eddie.

The market appears to have developed an indifference to early warning signs of fraud, and that inefficiency could provide savvy investors with a chance to hop off the bus before it heads into a ditch.

According to a study recently published in the Journal of Accounting Research, journalists are a lot better, or at least faster, at spotting signs of accounting fraud and corporate shenanigans than the SEC. Harvard Professor Gregory Miller measured the frequency of reporters beating the SEC to the punch in uncovering fraud and found that in roughly one-third of the 263 cases of accounting fraud confirmed by the SEC between 1987 and 2002, members of the press alleged wrongdoing before the SEC or the company announced any investigation.

The Columbia Journalism Review sums up the findings nicely: "And while beating the SEC to an investigation is like beating Porky the Pig in a bicycle race up the Alps, we concede it's not nothing."

I e-mailed Marketwatch columnist Herb Greenberg (Full disclosure: He's one of my heroes.) about the findings, because he was the only journalist to have proactively uncovered a case of accounting fraud before the SEC more than once; he's done that five times.

Given the relative speed with which journalists uncover fraud, I asked him whether the SEC could learn anything from the methods employed by journalist-gumshoes. Greenberg dismissed that idea saying that "There's a difference between reporting a story and formally investigating and finding legal fault .... No, nothing they can learn."

He added that that much-maligned band of investors known as short-sellers are often sources for investigative reporters, calling them the "first line of defense for investors because they're putting their own money on the line." But he said that really good information usually comes from "former employees, analysts, and mutual fund managers who have SOLD stocks for reasons other than valuation."

Herb Greenberg's latest Weekend Investor column poses an interesting question: With all the hoopla about excessive compensation, options backdating, and bad corporate governance, does it really matter from the perspective of an investor? While it may be a good excuse for some old-fashioned righteous indignation, what effect does bad governance really have on performance? Here's a telling quote from the piece:

No surprise, then, that companies like Colgate-Palmolive, PepsiCo and Kimberly Clark, whose stocks have been solid performers, also have received the best possible grades year after year from Mr. Anderson's firm.

"Well governed companies face the same kind of market and competitor risks as everybody else," he says, "but the chance of an implosion caused by an ineffective board or management is way less." No argument here.

That's certainly true, and I would say that while scandals like options backdating and excessive compensation aren't reasons to sell a stock by themselves (Overpaying for a CEO by $5 million a year is a quantifiable destroyer of value, and it's reflected in decreased earnings), these indications of self-dealing and greed are often symptomatic of other problems. Executives either have integrity and respect for the people they serve or they don't.

My tendency is to avoid stocks where I feel like there are governance issues, or even just companies who don't behave in a way that I consider to be ethical. When it came out that Enron had profited by manipulating the California energy markets, a lot of cynical investors cheered -- After all, Enron was making them rich! But their rejoicing was short-lived as Enron was robbing Grandma Millie and its shareholders.

I think it's important to look at bad business practices not in terms of the finite cost of the problems observed, but as indications of likely future problems: If a board signs off on excessive compensation, it's probably not paying very good attention. There's a good chance that the company may lack effective internal controls.

In his book Maxed Out, James Scurlock discusses the "debt hell" that so many working Americans have found themselves in. The stories he profiles are often tragic, and tend to deal with people who earn little income. But he also takes a vist to a store called the "Yuppie Pawn Shop" where the "rich" can pawn things like Rolex watches and flat-screen TV's when they don't have enough money to pay their bills. Today, Herb Greenberg discusses the plight of the "seemingly well-off" who have overextended themselves financially.

Herb Greenberg's Weekend Investor column focuses on the need for investors to be more skeptical or, as he calls it, detective-like. By looking deeper into the numbers than just the earnings per share or revenue growth, you can sometimes uncover signs of trouble before most Wall Street analysts do. And with increased disclosures as a result of the Sarbanes-Oxley Act, there may be more red flags to be found than ever.

Unfortunately, I suspect very few investors have the skills to read a 10-K or 10-Q critically. Most of us just take everything at face value. But, learning a little bit of "forensic accounting" is a lot of fun (you really do feel like a detective) and may help you notice some danger signs. Here are my favorite books for digging deeper into financial statements and seeking out signs of fraud or misrepresentation:

Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports by Howard Schilit. Probably the best book on accounting fraud.

Quality of Earnings by Thorton O'Glove. I found this one dry and boring, but it's written by one of the first experts in the field, and contains some great examples.

The Art of Short Selling by Kathryn F. Staley. While not exclusively about accounting fraud, this contains some interesting stories of companies that were engaging in creative accounting. And, if you become an expert on creative accounting, short-selling may be a way to a profit from it.

In a film clip taped for Marketwach, Herb Greenberg, known for his scathing pieces on companies in trouble, added his voice to the world of reactions to Jim Cramer's interview on TheStreet.com in which he talked about manipulating stocks.

In his interview, Cramer described feeding negative information to the media about companies in which he had taken short positions. As a journalist who frequently speaks with short sellers, Herb Greenberg dismissed the scandal surrounding this, saying that it was no less legitimate than a bull talking about a stock to the media.

I have a tremendous amount of respect for Herb Greenberg. His intelligent analysis penetrates far deeper than just about any other market commentator, and he seems to be right more often than he's wrong. Investors who listened to his warnings on Novastar could have saved a lot of money, or gotten rich on the short-side.

Watch Greenberg's piece on Marketwatch (by clicking the read link below), and, if you don't already, start reading the blog one of Wall Street's best journalists.