SEC's problem is this did not occur in a vacuum. They are dealing with the SENATE Jucidiciary Committee, and a GAO audit right this minute. This is just another dagger. If you see what Aguirre is about, he is not in a witchhunt trying to nail Samberg and Mack, who should be nailed. He is saying if you have influence/power/money, you get preferencial treatment. Problem is, first, it's illegal. Second, influence/power/money are not synonomus with good judgement. Remember when you were a kid, and the nasty family was at the pool? They'd look at you and grin, and you knew they were peeing in the pool? These guys are peeing in our pool.
Excellent Commentary All .......................................................................................... Transparency with regards to how WS really works...if allowed to be totally transparent would be somewhat like Proctor And Gamble telling you that the small size Colgate really costs them 20 cents ...and they sell it to the public for 150 cents.... In the late 70s...the major brokerages purposefully made their statements vague in order to soften the visibility of high commissions.... In the 80s....brokerages made incredible amounts of money on limited partnerships...because of a lack of visibility... True bond prices to this day have a lack of price visibility.... The list goes on... WS gurus and pundits can gain influential media access without any form of previous performance documentation....they could and probably do have the capabilities of an Elmer Fudd... Investment Banking......Look you have a list of items that need to be in place in order to bring a private entity to a public name...and these deals are almost clandestine.... .................................................................................................... In brief....by necessity WS makes its fattest premiums mostly out of the lack of transparency.... When brokerage commissions became transparent...look at what happened to WS brokerage business.... When some bonds started to become electronically listed...look at what happened to some of the bond houses.... When wal-mart came to town....look at what happened to Mom and Pop retail businesses...etc...etc... .................................................................................................... Both media and brokerage will cater to whomever pays them the most money...and always will....and even in the legal arena...as it is impossible for individuals to fund large cases.... ................................................................................................. If one dares to play the game....be prepared.....or just be another lemming..... ................................................................................................
Great headline in USA Today Money section: CNBC's Cramer boasts of manipulating markets Updated 30m ago | Comment | Recommend E-mail | Save | Print By Matt Krantz, USA TODAY CNBC TV host Jim Cramer has made a name for himself telling viewers how to make money in the stock market. Here's one time he might wish he'd kept quiet. http://www.usatoday.com/money/markets/2007-03-23-cramer-usat_N.htm How much longer will he be involved with markets? Will Cramer be the next Dorfman? I dunno, ole Jimbo is pretty darn slippery...
bad advice: How to lose your money fast. Cramer vs. CramerWill his crazy confession destroy his career? By Henry Blodget Updated Thursday, March 22, 2007, at 10:55 PM ET Browse the entire Bad Advice series here. Jim Cramer and I had a bit of a tiff a few weeks ago, so some readers might view this column as just another round in that fight. Others might see it as the pot calling the kettle black, or schadenfreude. Think what you willâbut as the author of a column about bad investment advice, I feel compelled to comment on what just might qualify as the worst financial counsel ever offered. As the New York Post, the New York Times, and Reuters recently reported, Cramer gave an interview on TheStreet.com's Wall Street Confidential in late December (watch it here) that can be read as recommending that hedge funds boost returns by orchestrating stock prices and spreading false information. He said that "this is the way the market really works" and that those who don't do these things "shouldn't be in the game." He also talked about his own practicesâorchestrating stock pricesâto boost returns at the hedge fund he ran in the 1990s. Even those familiar with Cramer's "just be outrageous" style will find this clip startling. It raises questions not only about Cramer's activities as a hedge-fund manager, but about his judgment. It also, I think, threatens Cramer's career. Let's begin by reviewing the definition of illegal market manipulation and what, exactly, Cramer said. According to the SEC's Web site, market "manipulation" is: intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security. Manipulation can involve a number of techniques ... [such as] spreading false or misleading information about a company ⦠or rigging quotes, prices or trades to create a false or deceptive picture of the demand for a security. Those found guilty of manipulation are subject to criminal and civil penalties. On the show, Cramer begins by ignoring a seemingly unrelated question and describing how he used to move work the market futures. (Click here for a verbatim transcript of Cramer's comments. The excerpts below include interpolations, indicated by brackets, that try to make sense of Cramer's shorthand.) A lot of times when I was short at my hedge fundâmeaning I needed [the market to go] downâI would create a level of activity before [the market opened] that could drive the [pre-market] futures [down]. ⦠Similarly, if I were long, and I wanted to make things a little bit rosy, I would go in and [buy] a bunch of stocks and make sure that they were higher ⦠It's a fun game, and it's a lucrative game. You can move [the market] up and then fade itâthat often creates a very negative feel. ⦠That's a strategy very worth doing. ⦠I would encourage anyone in the hedge fund game to do it. Because it's legal. And it is a very quick way to make money. And very satisfying. Cramer says that this sort of maneuver is legal, which is a debatable proposition. And Cramer's next comment appears to suggest that he at least thinks the behavior is something to hide: By the way, no one else in the world would ever admit that. But I don't care. And I'm not going to say it on TV. (What Cramer meant by that last remark, presumably, was that he wasn't going to say it on CNBC, which airs his hit show, Mad Money. That he said this while sitting in front of a TV camera is bizarre.) Cramer then goes on to describe what struggling hedge funds should do to improve their performance: [Y]ou've really got to control the market. You can't let it lift. When you get a [bellwether stock that is soaring like] Research in Motion, it's really important to use a lot of your firepower to knock that down. ⦠So, let's say I were short. What I would do is hit a lot of guys with RIMM [sell a lot of Research in Motion stock to a lot of investors]. Cramer draws a line in the sandâbriefly making it look as though he is not suggesting that hedge funds break the law. Then, he appears to recommend that they do. Now, you can't "foment." That's a violation. You can't create yourself an impression that a stock's down. But you do it anyway, because the SEC doesn't understand it. [my emphasis]. That's the only sense that I would say this is illegal. But a hedge fund that's not up a lot [this late in the year] really has to do a lot now to save itself. This is different from what I was talking about at the beginning where I was talking about buying the QQQs and stuff. This is actually blatantly illegal. But when you have six days and your company may be in doubt because you're down, I think it's really important to fomentâif I were one of these guysâfoment an impression that Research in Motion isn't any good. Because Research in Motion is the key today. part II follows
Until this point, Cramer has just played the role of coach. Next, however, in an example that could come back to haunt himâand in seemingly direct contrast to what he says in his just-released explanationâCramer switches from adviser to practitioner: What I used to do ⦠if I wanted [a stock] to go higher, I would take and bid, take and bid, take and bid [repeatedly buy stock and then make an offer for more], and if I wanted it to go lower, I'd hit and offer, hit and offer, hit and offer [repeatedly sell stock and then put more up for sale]. And I could get a stock like Research in Motionâthat might cost me $15 to $20 million to knock RIM downâbut it would be fabulous, because it would beleaguer all the moron longs [investors betting the stock would go up] who are also keying on Research in Motion. I'm not a lawyer, but it sure sounds to me as if Cramer is admitting here to a practice that is questionable at best. He then switches back to adviser mode and describes the next part of the game, which is to get reporters involved in helping your cause. Again, when your company is in survival mode, it's really important to defeat Research in Motion, and get the Pisanis of the world and the people talking about it as if there's something wrong with Research in Motion [Bob Pisani is a reporter at CNBC]. Then you would call the [Wall Street] Journal and you would get the bozo reporter on Research in Motion, and you would feed that Palm's got a killer [competitive product] that it's going to give away. These are all the things you must do ⦠and if you're not doing it, maybe you shouldn't be in the game. Cramer does not say here explicitly that hedge funds should lie to the "bozo reporter" at the world's top business publication, but a few minutes later, after describing how he would knock Apple's stock down, he clarifies: What's important when you're in that hedge-fund mode is to not do anything that's remotely truthful. Because the truth is so against your view that it's important to create a new truth to develop a fiction. Later, Cramer summarizes: The great thing about the market is it has nothing to do with the actual stocks. Now, maybe two weeks from now, the buyers will come to their senses and realize that everything that they heard was a lie, but then again, Fannie Mae lied about their earnings for $6 billion, so there's just fiction and fiction and fiction. I think it's important for people to recognize that the way that the market really works is to have that nexus of: Hit the brokerage houses with a series of orders that can push [the stock] down, then leak it to the press, and then get it on CNBCâthat's also very important. And then you have a kind of a vicious cycle down. It's a pretty good game. Is that the "way the market really works"? After a decade on Wall Street, I think it's plausible that some hedge funds play such games. Do all of them? No. Do hedge funds and other investors have to break laws to do well? Absolutely not. So, what happened here? I am speculating, but when this interview was shot, Wall Street Confidential was a new show, and I suspect that Cramer was trying to make it as sexy as possible. This desire, combined with his colossal ego and continual shtick about being the-only-guy-with-the-guts-to-tell-it-like-it-is, probably helped him lose his mind temporarily. What are the implications of the clip? Well, first, Cramer is once again giving terrible advice. How? By advising investors to engage in practices that might be considered illegal. Cramer appears to say it's OK to orchestrate prices ("it's important to foment â¦"). "The SEC doesn't understand," so you won't get caught. Even if this were true, and even if the only consideration were risk/reward, this would be bad advice. Second, Cramer is implicitly undermining everything he says on his CNBC show. The whole conceit of Mad Money is that small investors can compete with the Big Boys of Wall Street. Well, if this is really the way the Big Boys play the trading game, how can that possibly be true? Is Cramer just implying (but not saying) on Mad Money that small investors should break laws? Third, Cramer is putting his employers (and regulators) in a bind. Yes, Cramer is a ratings and readership machine. TheStreet.com is a public company, however, and it presumably does not want to become embroiled in a controversy about whether its advice crosses the line. CNBC, meanwhile, is a subsidiary of GE, a company with a well-deserved global reputation for integrity, fairness, and quality. Leaving aside the insult that Cramer lobbed at "the Pisanis of the world," can CNBC really say nothing when one of its most visible employees urges investors to use the network to engage in behavior that is questionable to say the least? Lastly, there is the tar that Cramer dumped all over his former firm and the entire hedge-fund industry. Did Cramer's former clientsâsuch as Eliot Spitzer, former attorney general and now governor of New York, who made his name excoriating Wall Street practices (and me)âknow that Cramer was engaging in these practices to boost returns? If so, what did they think of this? What does Gov. Spitzer think of it now? Cramer loves to boast about his hedge-fund record. At the very least, we now know where some of it came from. This morning, in response to widespread outrage, Cramer published an explanation on TheStreet.com. In it, he says, "No one knows or respects the securities laws more than I do." He says that he was just describing other, dirty hedge funds in his "hyperbolic and tongue-in-cheek style"âand that he himself was clean as a whistle. He never mentions that he was recommending that some hedge funds engage in these practices. He implies that critics of the interview are just "competitors" or professional investors who want to shut him up. To those who have listened closely to the interview, this is almost insulting. So far, CNBC, Cramer's biggest platform, has remained quiet on the topic. (A spokesman has not returned my call). This is probably because 1) they are hoping the whole thing will just blow over, and/or 2) they don't know what to say. It is certainly possible that the whole thing will pass: Cramer has been very effective at stifling or weathering critics. It is also possible, however, that Jim Cramer has committed professional suicide.
Thanks to "crusading" do gooders looking to protect the public, another valuable piece of infomation about the way things work is whitewashed from the annals of history. And one wonders why the general public always knows so much less than it should. Let's just keep feeding the public the sanitized PG version of the world filled with TV cliches.
Helloooo. The Securities Industry exists to take your money. If you don't understand that... Or think any of this is "unbelievable"... stop trading today. That includes Cramer, Bright, ET, etc. These people are a lot smarter than you are... And have 1001 tried and true ways... To transfer YOUR money into THEIR pocket... with a smile. This game is called business and is perfectly legal... But it is meant to be played by ADULTS.
LOL, a bit of a stretch tieing a web blog and a broker dealer, with an impeccable record within the industry, to what Cramer has done. Don't recall Cramer providing services or capital to traders, but, I do get your drift about the "Adults" part. Personally, I think Cramer probably did all those things wrong, and was pretty dumb "bragging" about it as well. Anyway, not a big deal, everyone's entitled to their own opinions. Don
I did mean to directly tie Bright to Cramer... Only in the sense that both are High Profile parts of a vertically integrated Securities Industry... And have precisely the same goals: To transfer wealth from the Public to the Securities Industry. Cramer is a total sleazebag who sold his soul many years ago... And probably makes 7 figures shoveling completely worthless information to hopelessly naive viewers. Bright is a perfectly TYPICAL industry operator with a Good Reputation... But does, in fact, burn through 100s of unqualified "traders" to pad it's bottom line. If Bright was a pure Trading Operation... You would be hiring Professionals at high end job sites... Instead of beating the ET bushes for n00bs.