1:03 EST - Update. Patrick Byrne was on Bloomberg, and made the comment that the short interest in OSTK is now 8.9 million shares, when there are only 8.4 million shares at the DTC. In other news, Cramer, in his blog, simultaneously says he respects the government's duty to investigate miscreants, but paints his own investigation as a witch hunt. Man, I wish I had a dollar for every perp who has ever declared himself to be a victim of the man. The prisons are filled with innocent men. Anyway, now he is claiming that there is a conspiracy involving Byrne, the SEC, and parties unknown. Isn't it odd that the guy who was calling Patrick a loon is now the biggest conspiracy theorist out there? Anyway, that is the latest..
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3:38 EST - Further Update. Jim Cramer - Victim, or shifty, guilty dog? You decide. A few minutes ago, on Ron Insana's show, Cramer and Herb were doing their tag-team of outrage, and they were discussing the companies in the subpoena - NFI, OSTK, OVTI - and Cramer blurted out, "I like OVTI" or something much like that. Wrong, Jim, or rather, incomplete answer, no? You didn't until just recently, and the subpoena isn't likely for the last few weeks, ya think? Seems just a wee bit, well disingenious, doesn't it? Here, from http://www.madmoneyrecap.com/daily_summary_111705.htm
"OVTI: #2 MOST HEAVILY SHORTED STOCK ON THE NASDAQ. THIS STOCK BOTTOMED AT ABOUT 12.00 LAST WEEK. IT'S UP ABOUT 25% SINCE THEN WITH A 39% SHORT RATIO. IT MAKES SEMICONDUCTORS FOR IMAGE SENSOR DEVICES. I DON'T LIKE IT. IT'S MISSED ITS LAST TWO QTRS AND I THINK THE ESTIMATES ARE STILL TOO HIGH.".
Jim, Sweety, gotta keep it linear, n'est pas? Try to keep the stories straight. Take a minute out from shrieking, "Byrne is out to get me" and, "I'm a victim of persecution" and try to keep the fish stories in order - how will it look on the stand if you're saying you liked a company you were bashing for the period the subpoena covers? Really. This is amateurish. Get some rest. Stay away from the caffeine, or anything else overly-stimulating. Think things through - you are making dumb mistakes now - the kinds of mistakes shifty, guilty dogs make. Straighten up...you might soon have a date with destiny...Wait - this just in - someone emailed me that Cramer said he "should have lit the subpoena on fire." Now Jim, is that any way to go on? Nobody likes a potty mouth...
Further Cramer fun: His "I only met Rocker once, in a grocery store" line is by now a classic, but his latest bit about never having heard of Gradient/Camelback should be easy to check. Anyone have any fun links? Here's one where Camelback is slamming Biovail in TheStreet.com: http://www.thestreet.com/_forbes/comment/adamfeuerstein/10178520_2.html</a>
Send me any research you can...
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After watching the Mad Money episode from last night, I have to say that I have never seen as reckless a disregard for the rule of law and the authority of a regulator demonstrated by a member of the media before.
One word kept jumping into my consciousness as I watched, mouth agape:
Contempt.
Sheer, unbridled contempt for the authority of the SEC, and for the general rule of law.
It was hard to misinterpret Mr. Cramer’s actions. As he hurled the SEC subpoena on the floor, I wasn’t confused. When he held it up at the end, with “Bull” written across it, I wasn’t grasping for what he was trying to convey.
It came across loud and clear:
Hey, SEC? F you. You can’t touch me. I’m a force apart from you, and you have no control over me. Those stupid rules for the rubes? Not mine. I don’t defer to you, and I sure as hell don’t answer to you.
That about sums it up. Arrogant, unrepentant, rebellious, contemptuous of the regulator’s office and of its authority – the man did everything but pull down his trousers on national TV, and wipe his A with the subpoena. It was hard to mistake. And all done with incredible insincerity, faux outraged dignity, and a conspicuous lack of believability - and of course, trying to spin the yarn that there is now a conspiracy against him. They just sounded so, well, sleazy and shifty, like "The Lying Guy" from SNL. Know what I mean?
When I read the weekend NY Times and the NY Post coverage of the developing story, I was confused, because they seemed to feel that this was a 1st Amendment issue – safeguarding the sanctity of the freedom of the press – which I agree is fundamental to the American way of life.
And yet this morning’s coverage demonstrates the stark contrast between the NY press’ spin on things, and the rest of the country’s. Here are some excerpts of this morning’s NY Post bit from Roddy Boyd (who claims the SEC “withdrew” the subpoenas), followed by some snippets from the LA Times (which contends the Commission is reviewing them this week) – are they writing about the same story?
The NY Post:
“After a storm of criticism, the SEC on Friday withdrew (emphasis added) those subpoenas, issued to two Dow Jones columnists, Herb Greenberg of MarketWatch and Carol Remond of Dow Jones Newswires.
Yesterday, Cox publicly rebuked SEC staff attorneys for filing the Dow Jones subpoenas without first consulting him.”
You can view Roddy’s column here: www.nypost.com/business/64330.htm
The LA Times:
” "The sensitive issues that such a subpoena raises are of sufficient importance that they should, and will, be considered and decided by the commission before this matter proceeds further," he said...
Thomsen declined Monday to talk about the subpoena or the investigation. In an interview, she maintained that SEC subpoenas were issued only after careful consideration.
"We don't issue subpoenas willy-nilly," Thomsen said. "Without regard to any particular investigation, we're going to do it with great care, based on where the evidence is taking us."
Cox has been trying to calm some of those corporate critics while assuring the public that he remains committed to robust enforcement.
"Investors have every right to expect that there will be an aggressive program of securities law enforcement," he said. Speaking of the enforcement chief, he added, "My estimate of Linda Thomsen is the same as it has been since the day I met her. She is absolutely outstanding."
The LA Times piece can be viewed here. Note the contrast between the coverage.
But as the saying goes, a picture is worth a thousand words, or maybe in this case, a million New York words.
What I got watching Cramer was an arrogant, contemptuous sociopath who openly mocks the integrity and authority of the regulators, and who is using the most convenient shield available with which to protect himself. And that is the tame opinion.
It reminds me of old TV shows, where the crooked narco-trafficker is hiding behind his diplomatic passport, relying on that to safeguard him from the repercussions of his mis-deeds. Anyone that is going to frame the SEC’s investigation into a stock manipulation scheme (involving a ring of collusive hedge funds, media personalities, and research organizations) as some kind of an effort to usurp the freedom of the press, had best take a good long hard look at Mr. Cramer’s behavior and tone.
This isn’t about freedom of speech, or freedom of the press.
This is about spoiled, wealthy, arrogant megalomaniacs who believe that the rule of law doesn’t apply to them - that they are untouchable. That was obvious from Mr. Cramer’s composure. He just doesn’t think anyone can do anything to him. He’s too rich, too successful, and above all, a “member of the media.”
This distance from accountability typifies the tone from Herb and from AP, as well. They don’t feel that they should be subjected to an investigation of malfeasance and manipulation involving the press – somewhere along the road freedom to express oneself without censure became synonymous with freedom to get away with murder.
I don’t buy it for a second. And the American public doesn’t either. The CNBC poll last night showed 89% of respondents approved of the SEC’s actions. They aren’t buying the NY media’s spin of these subpoenas – and that should be a wake-up call to Commissioner Cox, as well as anyone plying the “they’re victims” bit. It doesn’t wash. And Investrend’s poll shows 92% think that Christopher Cox should be rebuked for his handling of the subpoenas thus far – the poll can be viewed here.
Of note is that the number two person at the SEC, Linda Chatman Thomsen, the Director of Enforcement, was aware of these subpoenas. This is the person who has actual hands-on experience running investigations, and who understands what needs to be done to catch bad guys. Thomsen has many years of experience doing exactly that. With all due respect to Commissioner Cox, he has exactly zero experience working in Enforcement, and has demonstrated exactly no acumen germane to successfully investigating and prosecuting miscreants. This is a critical call for him to ultimately make, and I believe it will either destroy, or solidify, his legacy at the SEC.
If he, a political appointee, interferes with an ongoing Enforcement investigation, and for political reasons decides to alter the course of that investigation, then he jeopardizes the integrity of the regulator as a policing entity in the markets. It will send the clear message that if you apply the right pressure, or are rich and powerful enough, you won’t be burdened with the sorts of inquiries lesser mortals are required to endure. And it will destroy Enforcement’s capability to be effective – forget about what it will do to morale.
If the Commissioner allows Cramer’s contemptuous face-slap to stand, he might as well turn out the lights on his way out the door. The SEC has gone through a difficult and dark period, where it spent a fortune to prosecute Martha Stewart for a trifle in comparison to the allegations being made in the OSTK case. If Cox allows Cramer’s flinging of the symbol of the SEC’s authority to the ground to go uncontested, then he diminishes the office he occupies, and he earns the low regard with which Mr. Cramer clearly holds the Commission.
As the LA Times notes, the SEC doesn’t pass out subpoenas to guys with such a high profile as a Cramer or a Greenberg unless they have a pretty good idea of what they will find. It isn’t fishing – it is getting confirmation of what they are pretty sure they already have in the bag. That’s how they operate. They gather the info, and then once they are close enough, they go in and get the final proof.
I’m not saying they are guilty until proven innocent. But alternatively, I don't believe that just because one claims some media affiliation, that immunizes one from investigation, or prosecution. Let the facts be known, not hidden. No more cover-ups using facile excuses and flimsily-constructed hiding places. Freedom of the press is far too precious to allow miscreants to flaunt it - to use it to taunt law enforcement and regulators; to wield it to thwart legitimate inquiry.
Mark my words. These guys will spend a lot of time and money and effort to make this SEC investigation something it isn’t – a witch hunt, a persecution of the press, preposterous, you name it. I believe that it is all a cynical attempt to deflect unwarranted attention, and to leverage the power of the media, in order to quash legitimate inquiry.
The OSTK suit, to my eye alleges a number of materially illegal things, not the least of which is a network of manipulators colluding with the media to create and to time negative pieces, for the sole purpose of profiting by a targeted stock’s price declining.
That isn’t freedom of the press.
That is stock manipulation.
If these people are involved, they shouldn’t be allowed to tarnish the protections that are so hard fought for the press. Being shielded from having to divulge a source that leaked sensitive government information is not the same as being shielded from having to give up your emails and phone records because the regulators have very good reason to believe that you’ve been doing something illegal - records that are specific to your CONDUCT – not necessarily as a reporter, but as a collusive member of a stock manipulation scheme. That has nothing to do with speech, or the press. It certainly isn’t what the 1st Amendment was designed for – to protect the press from censorship due to the content of their message.
I can appreciate the distinction.
Anybody that can stand up with a straight face and defend the actions of Mr. Cramer as in some way representative of freedom of the press is absolutely out of their mind.
So, to recap: Cramer to SEC – F you. Cramer to investors: I’m better than you and don’t have to observe your rule of law, or your regulators’ authority. Cramer to the NY Press corps: make my arrogant dismissal of the SEC into a 1st Amendment battle. Cramer to his choagies: they can’t touch me.
Any questions?