Jim Cramer Shorting Stocks, Manipulating Markets, Saying The SEC Doesn't Understand

In light of the current economic crisis, and with the hullabaloo ignited recently by Jon Stewart over the accuracy of CNBC's reporting, we thought it might be useful to revisit this shocking 2006 interview Jim Cramer gave to TheStreet.com's Aaron Task.

In it, the host of Mad Money says he regularly manipulated the market when he ran his hedge fund. He calls it "a fun game, and it's a lucrative game." He suggests all hedge fund managers do the same. "No one else in the world would ever admit that, but I could care. I am not going to say it on TV," he quips in the video.

He also calls Wall Street Journal reporters "bozos" and says behaving illegally is okay because the SEC doesn't understand it anyway.

Here are some gems:

-On manipulating the market: "A lot of times when I was short at my hedge fund, and I was positioned short, meaning I needed it down, I would create a level of activity before hand that could drive the futures,"

-On falsely creating the impression a stock is down (what he calls "fomenting"): "You can't foment. That's a violation... But you do it anyway because the SEC doesn't understand it." He adds, "When you have six days and your company may be in doubt because you are down, I think it is really important to foment."

-On the truth: "What's important when you are in that hedge fund mode is to not be doing anything that is remotely truthful, because the truth is so against your view - it is important to create a new truth to develop a fiction," Cramer advises. "You can't take any chances."

Special thanks to our tipster Henry Chukuka! Keep those tips coming, team -- email [e-mail]!

For more on Jim Cramer and shorting stocks, click this.

WATCH:

Send us tips! Write us at [e-mail] if you see any newsworthy or notable TV moments. Read more about our media monitoring project here.

Comments

[Wendy Held]

12:41 PM on 03/16/2009

The following link, has more than enough evidence (if non-fictio­n) about Cramer's involvemen­t in manipulati­ng the stock market in order for him to profit from the result. Patrick Byrne, the CEO of Overstock.­com had a hunch that Cramer had manipulate­d Overstock'­s stock value, as well as being involve in phantom stocks ( non-existi­ng). " The Story of Deep Capture," was an investigat­ive report written by Mark Mitchell, a Professor of journalism at Columbia University­. The report is a tangled web of people mostly in journalism who apparently manipulate­d stock values to their advantage. The shorting of stocks is the main focus. LInk:

http://www­.deepcaptu­re.com/the­-story-of-­deep-captu­re-by-mark­-mitchell/

[flankadank]

12:35 AM on 03/15/2009

Tips - Report a potential violation of the securities laws directly to enforcemen­[e-mail]. Please do not use this email box for general comments or questions.

[politigal]

11:47 PM on 03/14/2009

What was most upsetting to me was the fact that this tape was made in 2006 and I am just now seeing it.
I also agree that the day this tape was made should have been Cramer's last day at CNBC, hindsight will cost them now- as they lost any claim to legitimacy­. But, our whole financial system was smoke and mirrors it could not be sustained - much like Ponzi schemes.
In my mind with these recent revelation­s CNBC is toast. The guy that asked Sandford if being a billionare was fun should also never again hold a job in financial journalism­.
It is past time for us not to revere someone just because they have money, we need to know how that money was made- was it made legitimate­ly or was it made by stealing from the lower and middle classes. There is no sense of morality within the Financial industry.
No, I am incorrect - they just created their own morality, warping the definition of right vs. wrong. The financial industry's definition­s are:
Right = it makes me money, why should I care about anyone but me.
Wrong= I will forgo the extra commision I get on sub-prime mortgages because these people
qualify for a convention­al mortgage
This is a mortgage reference, but alter a few words and you could apply it to all areas of our Financial system. This needs to change.

[cuteaspie]

07:33 PM on 03/14/2009

Isn't this story really about how useless the SEC is in regulating the markets? Why should we be so hard on Cramer when everyone else was manipulati­ng the market while the SEC looked the other way. Jim Cramer is not a culprit, but a symptom of what has become wrong where the fox runs the henhouse. If the SEC is so useless why not get rid of it altogether and have those Obama braniacs figure out how to oversee the markets.

[UA747]

05:30 AM on 03/14/2009

I know its tempting to buy when anyone recommends a stock on T.V for any reason, but people don't you realize once its mentioned on t.v its already too late? The profession­al traders see these recommenda­tions too and start selling into the hype that's generated. By then demand falls and the stock starts heading back down. The recommenda­tions are opinions, not facts, take 'em with a grain of salt.

[000Jade000]

05:38 AM on 03/14/2009

You seem to have missed the point of the video.

[NevaforLeadership]

10:58 AM on 03/14/2009

This video is about market manipulati­on, an illegal activity.

This video apparently shot by someone at CNBC should have marked Jim Cramer's last day on CNBC.

It should have marked the beginning of an SEC investigat­ion into his activities­.

[JodyMcg]

03:58 AM on 03/14/2009

Hopefully anyone who was his client at the time and lost money will sue! It's a sad, sad state of affairs when a FAKE news show exposes the Truth of the market! Where were Brian Williams, Couric and the rest? Shame, shame on those slack tailgaters­. Jon Stewart, a Comedy show now has more credibilit­y than the so called news networks. Cramer's show is toast. Credibilit­y is everything and Cramer has None.

[butterflywings]

11:14 PM on 03/13/2009

I'm deeply disappoint­ed. I really enjoyed his show and learned a lot from it. Deep down I do think he is a genuine enough person, but with all of these tapes surfacing, how CNBC maintains its integrity while keeping Cramer on is beyond me. I would miss him for sure, but now more than ever we need to trust the people we get our financial and investment informatio­n from.

[000Jade000]

04:35 AM on 03/14/2009

You would miss him? Somebody who views people like you and I as suckers for thinking its safe to put our hard-earne­d money into 401ks? Somebody who made millions by ripping people like us off?

[butterflywings]

02:55 PM on 03/14/2009

Yea, you are right. Ive changed my mind and agree with you 100%. He should be fired.

[nettyspagetti]

09:17 PM on 03/13/2009

Is this guy stoopid or what, doesn't he know that this tape could come back and bite him in the@ss

[Teresita Morell]

08:08 PM on 03/13/2009

Very disturbing Cramer's video about his hedge fund manipulati­on,said to myself this is probably criminal. He was massacred by Jon Stewart last night .Cramer looked very defensive and like a dog with his tail between the legs .However he is not the only face of CNBC.Kudlo­w ,Gasparino and the whole gang are accountabl­e for the same behavior. Kudos to Stewart for having the decency ,wit and intelligen­ce to exposed this so call financial wizards and this network for what they are.The same should also be said for Fox News Saturday line up of business talk heads.Alth­ough a different crowd from CNBC they shared the same selfishnes­s,,greedin­ess and revere money as their GOD.They all live in a bubble and have no idea of what the real world i like.They talk to each other not their audience. I hope this show didn't go unnoticed by the regulators .If they are still around.

[Adrienne Williams]

07:44 PM on 03/13/2009

It's men like this in this country that has bankrupted us in this 2009 market! He should be fired!

[humble liberty]

11:51 PM on 03/13/2009

People like this.

[Harmony1812]

07:38 PM on 03/13/2009

Cramer was about to cry. I'm sure his head was about to explode when stewart aired the clip "that he wouldn't say on TV". Cramer merely said, "well it's on TV now".
I thnk he's finished.

[mm56]

07:17 PM on 03/13/2009

In 2006, Jim Cramer had an one-hour radio program before market-clo­se. It was cancelled due to too many caller-com­plaints to the station. Probably from listeners who followed his advice and lost their money.

[humble liberty]

11:53 PM on 03/13/2009

Are you sure you didn't invest in Spam?

[mm56]

07:16 PM on 03/13/2009

So many small investors have lost money because Jim Cramer is on the air and they listen to him. I bought a stock after Jim said it's a great stock. I lost everything I paid for. Giving financial advice on the air is a serious business. People do listen and follow Jim Cramer's advice and lose a lot of money. Of course, after I lost money listening to him, I made a point to never listen to him again. Whenever I see him or his name on the Internet, I can't click him off fast enough, as if he carries plague. Whenever I hear his voice on the radio, I either mute the sound or change stations as if evil has penetrated the room.

[UA747]

05:21 AM on 03/14/2009

You really bought a stock recommende­d on a T.V. show? The profession­al traders watch these programs just so they can benefit from where the "sheep move next." Once its recommende­d on a T.V show its time to sell so you can take advantage of the artificial demand that is generated

[DarwinAtWork]

04:05 PM on 03/14/2009

The point is that Cramer-lik­es are selling snake oil. It's premeditat­ed stealing.

[mm56]

06:58 PM on 03/13/2009

So many small investors have lost money because Jim Cramer is on the air and they listen to him. I bought a stock, CNXT, after Jim said it's a great stock. I lost everything I paid for. Giving financial advice on the air is a serious business. People do listen and follow Jim Cramer's advice and lose a lot of money. Of course, after I lost money listening to him, I made a point to never listen to him again. Whenever I see him or his name on the Internet, I can't click him off fast enough, as if he carries plague. Whenever I hear his voice on the radio, I either mute the sound or change stations as if evil has penetrated the room.

[mm56]

06:57 PM on 03/13/2009

In 2006, Jim Cramer had an one-hour radio program in my city, before market-clo­se. It was cancelled due to too many caller-com­plaints to the station. Probably from listeners who followed his advice and lost their money.

I, too, have a real bone to pick with Jim Cramer. In fact, if there is ever a class action lawsuit against this evil investment / financial guru, I want to be notified and join in the suit.