Mon Mar 26th, 2007 at 01:48:10 PM EST
(These comments are a follow up to Alexander's excellent diary of last week.) First I did receive a response from the SEC regarding my complaint and request for an investigation--I'm sure it's a form letter, but I must admit it's at least a form letter that makes sense:
Dear Mr. ___:
Thank you for your email and for taking the time to alert us to your concerns.
Please note the SEC generally conducts its investigations on a confidential basis and neither confirms nor denies the existence of an investigation until we bring charges against someone involved. We cannot provide you with updates on the status of your complaint or of any pending SEC investigation. We know this policy can be frustrating, but it protects the integrity and effectiveness of our investigative process and preserves the privacy of the individuals and entities involved. Our policy is more fully described below.
Once again, thank you for writing to us.
RINELL RANDOLPH JR
U.S. Securities and Exchange Commission
The US legal system does require this kind of an approach, but they are right that it can be frustrating.
There has been a fair amount of news coverage, such as the following:
Hedge fund lawyer Ron Geffner of Sadis & Goldberg called the interview a "somewhat surprising confession to make publicly, which definitely invites suspicion by regulators."
"Whether he violated the law is unclear," Geffner said. "That is dependent on his trading records. But it's clear that he seems to be challenging regulators to come and examine him." A spokesman for the SEC declined to comment on whether the agency is looking at Cramer's comments. A decade ago Cramer faced an SEC investigation over a column he wrote for SmartMoney magazine that touted four stocks without disclosing his holdings in them. He was eventually cleared of wrongdoing, according to news reports.
Other legal experts criticized Cramer's comments for suggesting that stock manipulation is widespread among the growing legions of hedge funds, which are investment vehicles that typically trade much more actively and use more complex strategies than mutual funds.
I hope they do investigate this, and extend it into a broader investigation of the industry. Hedge Funds are relatively new to the financial world, not well understood by most, and comments by Cramer are not only moronic, but bound to undermine confidence in the markets,,,which in general are open and transparent in the US. I acknowledge there were a lot of very good comments on the diary on this last week and the comments. In particular I have thought about, I believe it was HiD's comments, that this manipulation doesn't effect investors who invest for the long term, which is the vast majority. And furthermore that small time day traders, and we're now talking about the speculating/gambling section of market activity, should realize their playing with the "big boys" who have tremendous access to real time data and organizations that go after this 24X7,,,and they are likely to lose. They are also able to play the game globally, "carry trade" and other types of arbitrage, in a way that smaller speculators generally can not.
But still the objective needs to be fair and open markets, and Cramer's comments says they are not today--so imho that needs to be fixed, and if Cramer committed a crime, to the slammer with him.