SEC ALERT* Cramer Show Insider Leak....

Quote from sprstpd:

Are you positive about this? So I could run an upgrade/downgrade service and have my family trade on my touts before anyone else (or the moment I put them up on a website somewhere)? Then it wouldn't be illegal?
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Yes, I'm positive. I was formerly an NASD Principal and am currently a RIA for 20+ years.

That would depend. If you were a Registered Investment Adviser, that action would be illegal.

If you were a journalist (newsletter writer), and your recommendations were simply your opinions (and not based upon non-public, insider info), you and your family can do anything they want. After all, you might actually be a dumbass when it comes to touts.... and everybody who acts on your touts could end up regretting it. :D
 
Quote from gnome:

If you were a journalist (newsletter writer), and your recommendations were simply your opinions (and not based upon non-public, insider info), you and your family can do anything they want. After all, you might actually be a dumbass when it comes to touts.... and everybody who acts on your touts could end up regretting it. :D
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Man, if that is true, the definition of insider trading seems bizarre to me. I guess the trick is to get a big following (make a few good calls) in my free newsletter. Then from then on, just trade in front of all my articles. If I were viewing it as an impartial observer, I would definitely consider that insider trading.
 
Quote from sprstpd:

Man, if that is true, the definition of insider trading seems bizarre to me. I guess the trick is to get a big following (make a few good calls) in my free newsletter. Then from then on, just trade in front of all my articles. If I were viewing it as an impartial observer, I would definitely consider that insider trading.
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No, it's not. An insider has a specific definition under law. Basically it's (1) an officer or employee of the corporation or (2) someone who owns 10% or more of the stock... (not sure about the exact percentage of #2).

These people would be in a position to know things before they were public. It's illegal for any insider to act on info before it's made public... it's also illegal for someone who is not an insider himself to act on such info before it's public... that's the "source" thing.

It would not be illegal for you to act in front of your free newsletter recommendations... after all, they *could* be PURE HORESECRAP! :D
 
Quote from gnome:

It would not be illegal for you to act in front of your free newsletter recommendations... after all, they *could* be PURE HORESECRAP! :D
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Just one more angle - I find this interesting: so suppose I get this huge following on my free newsletter, i.e., I become the 2nd Cramer and people treat me like I am some sort of stock god. And I know based on past experience that within 1 minute of putting a recommendation on my website, that people will buy that stock up about 1% on average in a matter of minutes. I.e., there is NO RISK at all to me if I buy right before I put my recommendation out. So I buy right before the recommendation and then sell into that inevitable 1% pop. That is not insider trading? So Cramer could tell an inside circle of people before his show which stocks he is going to promote and that would be ok? My point is that this doesn't *seem* morally right to me. It is just fascinating that it is legal.

Also, there was that kid back in the internet bubble days that got busted by the SEC for stock promotion via stock message boards. Why was that a punishable offense?
 
Quote from sprstpd:

Just one more angle - I find this interesting: so suppose I get this huge following on my free newsletter, i.e., I become the 2nd Cramer and people treat me like I am some sort of stock god. And I know based on past experience that within 1 minute of putting a recommendation on my website, that people will buy that stock up about 1% on average in a matter of minutes. I.e., there is NO RISK at all to me if I buy right before I put my recommendation out. So I buy right before the recommendation and then sell into that inevitable 1% pop. That is not insider trading? So Cramer could tell an inside circle of people before his show which stocks he is going to promote and that would be ok? My point is that this doesn't *seem* morally right to me. It is just fascinating that it is legal.

Also, there was that kid back in the internet bubble days that got busted by the SEC for stock promotion via stock message boards. Why was that a punishable offense?
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You're mixing 2 issues.

#1. If you are not required to be registered with securities regulatory bodies (and a person whose market connections were ONLY as newsletter writer would not be required to register), you can buy in front of your recommendations if you like.

#2. However, if you immediately sold into the pop following your recommendations, you could be in violation of the regulations regarding "manipulating or attempting to manipulate" markets....

What you've described might be viewed as "pump and dump", which is illegal.

Yes, the internet touts with the intention to "pump and dump" were illegal. In fact, there is LOTS of that going on right now through massive SPAM emails.
 
Quote from gnome:

What you've described might be viewed as "pump and dump", which is illegal.
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So what if it wasn't me doing the buying and selling but someone that I knew that I told about the information beforehand? Would that be considered a "pump and dump"?
 
Quote from sprstpd:

So what if it wasn't me doing the buying and selling but someone that I knew that I told about the information beforehand? Would that be considered a "pump and dump"?
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Any "manipulation or attempt to manipulate financial markets" by any person, conspiracy of persons, or organization is illegal.... you already knew the answer before you asked, right? :D
 
Quote from gnome:

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Any "manipulation or attempt to manipulate financial markets" by any person, conspiracy of persons, or organization is illegal.... you already knew the answer before you asked, right? :D
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So just to complete this logic as it pertains to this thread, if somebody leaks the information from the Cramer show beforehand and the people who know this information buy before the show and sell into the surge during the show, why is this not a pump and dump? Why isn't it illegal?
 
Quote from sprstpd:

So just to complete this logic as it pertains to this thread, if somebody leaks the information from the Cramer show beforehand and the people who know this information buy before the show and sell into the surge during the show, why is this not a pump and dump? Why isn't it illegal?
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Sounds like a pump and dump conspiracy to me.
 
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