• The boards of American Airlines and US Airways are expected to meet this week to finalize merger discussions, which have been occurring for several months. American is the third-largest U.S. airline, while US Airways is the fourth. The two have complementary route networks, and a merger would likely create the largest U.S. airline. American has been in bankruptcy since 2011, which was one of the prompts for the merger discussions. US Airways shares (LCC) fell almost 2%.
• Hostess Brands Inc. will sell several of its individual brands and equipment at auction after receiving approval as part of its bankruptcy. The brands include Twinkies, Dolly Madison, and Ding Dongs. Previously, Hostess had received approval to sell its Wonder Bread and other bread products. Several companies, including the maker of Little Debbie snacks, are expected to bid for the various brands.
• About 5% of consumers had errors on their credit reports provided by the three major reporting agencies, the Federal Trade Commission reported today. While most of the errors were minor, some were significant enough to affect credit scores. The FTC said that consumers should check their credit reports on a regular basis but especially before applying for a loan.
• Autonomy Corp., the United Kingdom software company acquired by Hewlett-Packard in 2011, will be investigated by the U.K.’s Financial Reporting Council over problems that surfaced after HP’s acquisition, notably, accounting irregularities that caused HP to write down $5 billion related to Autonomy. HP’s shares (HPQ) fell 0.24%.

*****

Rule number one of committing fraud is, “Don’t commit fraud.” But people dense enough to commit fraud tend not to be so good with rules, leading them to break rule number two as well: “Don’t use obviously fraudster terms over email when you’re up to no good.” The FBI and accounting firm Ernst and Young recently released the results of a study that examined the most popular terms used in email correspondence in cases of fraud (such as rogue trading scandals and the ongoing LIBOR-rigging case). It’d be interesting if the most popular terms were code words or something clandestine. Instead, all the fraud tip-off terms were boringly conventional, indicating just how ill-thought out many frauds must be. Popular email terms used by fraudsters included “grey area,” “they owe it to me,” “nobody will find out,” and “off the books.” And then there are the blazingly obvious top three: “Illegal,” “write-off” (a little self-justification going on there), and the number one term, “cover up.”  It bears repeating that these terms were used in emails sent over corporate servers. It’s enough to make me think that criminal masterminds exist only in the movies.

What’s even worse for these fraudsters is that they don’t seem to understand that their every word won’t just be discovered, but will end up being analyzed and dissected in academic journals, written up by researchers giddy from being given access to this treasure trove of previously secret emails. This is the corporate equivalent of falling down on the dance floor at a YouTube convention. After the Enron scandal broke, researchers were given access to a database containing more than 500,000 emails from 150 of Enron’s senior executives.  The researchers are still using the emails not only to document criminal activity, but to map how people think and the language they use. One study, for instance, used the Enron senders’ and recipients’ word choices to develop a predictive model for who reported to whom.

This is like something you’d see on Animal Kingdom, except instead of primatologists studying gorillas, it’s linguists studying fraudsters, or Fraudsters in the Mist. I can imagine Jane Goodall hiding behind a potted plant in an Enron conference room, taking notes.