Manipulation fallout

This news post deserves it’s own space today – the video (originally from MillionDollarJourney) I posted has been hitting the financial websites pretty hard, and it seems that almost everyone is surprised by the candid and revealing insights Jim made in that interview.

Some highlights:

Cramer, on the other hand, seems to suggest purposefully planting falsehoods in the media in order to, in his words, “create a new truth to develop a fiction.”(smartmoney)

“I have to either shut up or get better at telling what I did or didn’t do,” Cramer told Imus. “I didn’t do a good job at distinguishing between the two.”(corporate crime reporter)

Where’s (pal of Jim, Eliot) Spitzer when you need him? Regrettably, the statute of limitations has probably taken care of any legal liability Cramer may have had for his claimed conduct; but what will CNBC do about Mr “I just want to make you some money” and this “I won’t say this stuff on TV”(nakedshorts)

The way I see it is that moving the market through aggressive buying and selling is not particularly illegal – however I’m no law student. The leaking of false claims to reporters is a little more iffy, but I doubt that it makes that much difference over the long term.

I’m not terribly surprised that fund managers in highly competitive world of finance occasionally cut corners. I am surprised by the fact that he talks about it almost off hand as if it’s expected if not essential to life managing a hedge fund.

This moving of the markets is reminiscent of the Hunt brothers silver buying during 1979 and 1980 which resulted in charges against the brothers of monopolization and market manipulation. (a brief summary here: buyandhold)


2 Responses to “Manipulation fallout”

  1. 1 imagineoneday April 3, 2007 at 1:07 pm

    The original video of the interview which started this controversy is now back on YouTube after having been pulled for a few days. Here is the link:

    As for fallout for Jim Cramer, it appears he’s going to tough it out. So far he has escaped any action by either the SEC or his employer, CNBC. The network obviously prefers ratings over ethics.

  2. 2 majic April 3, 2007 at 9:43 pm

    It’s interesting that nobody seems to worry about this type of behavior which means that:

    A) It’s too hard to detect
    B) It’s too hard to prove
    C) It’s endemic (and probably one or both of the above)

    Which says a lot about the financial markets. Education is your biggest friend here, know thy enemy 🙂

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