Sell, Sell, Sell: SEC Investigating Jim Cramer’s TheStreet.com

By Damien Hoffman

March 17 2010 Email

Intuitive Surgical Hits $393!

The Hoffman Brothers called ISRG at $152 and it ran to $393 for a 158% gain! See what the Hoffman Bros recommend you buy NEXT.

Click Here Now

Last October, I got into an argument with Jim Cramer because he asked me to remove my article about how Cramer’s company TheStreet.com (TSCM) was a “Sell” based on the framework in Cramer’s own books (See the emails in “Sorry Cramer … We Will Not Bow Down“). If TSCM was an exception to Cramer’s iron-clad rules because late 10Qs and bailing executives somehow didn’t raise concerns like in every other case, well it seems someone more important than both of us is concerned with the inner workings of TheStreet … the SEC.

Zero Hedge has broken the not-so-surprising news that today TheStreet filed a Form 12b-25 with the SEC which presses the ultimate “Sell, Sell, Sell” button on Cramer’s circus play station:

“As a result of the need for the Company and its independent registered public accounting firm to focus attention on matters related to the Company’s previously-announced review of the accounting in its former Promotions.com subsidiary, which subsidiary the Company sold in December 2009 — including matters related to the preparation and filing by the Company in February 2010 of a Form 10-K/A for the year ended December 31, 2008, a Form 10-Q/A for the quarter ended March 31, 2009 and Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively, and matters related to an investigation commenced by Securities and Exchange Commission in March 2010 — the Company requires additional time to prepare its financial statements, assess its internal controls and file its Form 10-K for the year ended December 31, 2009 (“2009 Form 10-K”). The Company expects that it will be able to file its 2009 Form 10-K on or before the fifteenth calendar day following the prescribed due date.”

OK, Cramer. Now, please explain to me this time why TSCM wasn’t the biggest “Sell, Sell, Sell” stock on Mad Money tonight? I’ve bought all your books and been on your show, so maybe you can explain why every last bag holder, I mean shareholder, of TSCM shouldn’t liquidate their position and move on to much brighter, less criminally investigated pastures?

As we shake our head at yet another Cramer bomb (as his bankrupt picks are affectionately called by pro traders), I leave you with a legendary piece of Cramer’s journalism (which he spins is out of context because he was talking about Bear Stearns bank accounts rather than the stock — but “Bear Stearns is fine” means the company “is fine” for both account holders and shareholders, or at least it does to real analysts, independent researchers, and now the SEC):

Do you love or hate Cramer? Tell us why in the comments below …

Sharing Is Cool

Looking for Profits? Wall St. Cheat Sheet Premium subscribers have been crushing the markets with winning stock picks and a professional navigator in the hot gold and silver sectors. Let our team of professionals give you their best investing and trading ideas:

Click here now for your FREE trial to any of our acclaimed newsletters

Readers who liked this also enjoyed these posts:

joe johnson

trading in tscm is nothing but a conjob to sure in suckers to bid/buy the stock. it trades like a PONZI SCHEME. it's like 1 guy and his partner shoveling shares back and forth to flim flam the price. scamjob. the price faking also has the consequence of producing FALSE VOLUME which is quite illegal. the s.e.c. doesnt have the wherewithall to chase these type of wall street swindles because there are so many of them. nevertheless, current bag holders want to get out of this stock asap before it hits $.01 or delisting or bankruptcy or arrest of the entire bod whichever comes first. best to stay away from sewerstock llike this.
Kurt

Cramer doesn't always get it right, but he is part of my securities education. I value that aspect. I've never bought a stock on his recommendation but I value his approach to the market. I think he actually wants to be an educator which in the context of offering stock picks is an impossible task butg his methodology is worth studying.
Damien Hoffman

Cramer taught me a couple things a long time ago. The problem is he doesn't follow his own framework.
Baruch

Umm, wasn't his "they have no idea", "this is armageddon" rant, calling for an emergency rate cut to stave off a banking crisis actually pretty prescient? Seeing as it ran in, like, August 2007?

Why is that "LOL"?

Surely, it at least balances out "Bear Stearns is OK."

I guess he was pretty dumb thinking in March 2008 that Bear Stearns and capitalism wasn't likely to implode, but then I didn't think it was back then either. I recall the stock was well above zero, so he probably had some company.

And if you took the other side of that trade, what did you call your yacht?
DamienHoffman

Not sure I follow you. I don't think anyone calling for an emergency rate cut to protect their portfolio is prescient. It's simply talking your book.

If permabulls like Cramer had their way, the Fed would cut rates every time their picks were down 20%.

I have many posts on this site linking to the Barron's studies of Cramer's calls. His track record is awful. That is indisputable.
Baruch

It's pretty simple; you referred specifically to his "They know nothing!!" rant, in August 2007. According to my understanding, Cramer was pleading for an emergency rate cut not to protect his portfolio, but rather because he was worried about systemic risk from teaser mortgage fallout, and a subsequent banking crisis -- all of which we eventually got.

(OK, attempting to warn of a systemic crisis could be viewed as talking one's long book, but in this case he was talking everyone's, and the US economy's in general, so I think we could cut him some slack, no?)

Predicting the banking crisis of 2008 is prescient. Especially given that very few people were talking about it at the time of the Rant. You seem to think this was a Bad Call by Cramer. I think it was a very good one.

I have no doubt some, possibly most, of his calls on TV are terrible. But you could say the same about many portfolio managers, who still manage to post decent returns. How is his portfolio doing? That's the real test. I genuinely don't know how he has done recently, just that he ran a very successful hedge fund in the past.
DamienHoffman

Given the videos of Cramer still telling people to buy stocks in Jan 2008 (easily found on YouTube), I don't think he nailed the banking crisis.

Here is a nice look at Cramer's picks:

<a href="http://online.barrons.com/article/SB1233971073996..." target="_blank">http://online.barrons.com/article/SB1233971073996...
DavidMerkel

Cramer gave me my start in writing, so I have mixed feelings. I appreciate what he did for me.

TSCM has never been a great investment, look at the negative retained earnings. My suspicion is that their only profitable product is RealMoney, which I used to write for. TSCM's merits as an investment is a somewhat separable issue from Cramer, though... he *is* the brand.

What I find more difficult is the proffering of rapid and reactionary opinions. Investment is best when it is slow and deliberate. Cramer himself is at his best when he does that, e.g., books, and longer form non-reactionary articles (which he doesn't do as many of as he once did).

The trouble is, in the short run, touting stock ideas brings in revenue, but it has a pretty high decay rate. And, in a sense, that is the economic conundrum of TSCM, which makes me wonder if it will ever be profitable in the long run.

But, they have done Wall Street one great favor that TSCM was never able to monetize -- they trained many of the best young financial journalists we have today. The quality of financial reporting has risen over the last ten years, and one moderate part of the reason was TSCM.
DamienHoffman

David, I couldn't agree with you more. In fact, if you read my email exchange with Cramer, you will see I was once a Cramer fan. But once he started Mad Money, it was all downhill from there.

There are many talented writers who got their start at TSCM. I feel bad they are associated with TSCM management and Cramer's circus show.

Thanks for stopping by, David!
beav909

I lost ALL respect for this jerk when he started trashing anyone and everyone who dared call for higher interest rates during the last few years. The ONE time I ever bought a stock that this Goldman pimp recommended (DWT - Brit Bulk), I lost my @$$. The stock went from $15 to a penny in 3 months AFTER Goldman IPO'd it and Crammer pumped it like the shill he is. He is a reckless, piece of trash who belongs in JAIL, imo, If only the truth were known about Cramer, Goldman and their army of greasy thieves.
DamienHoffman

Amen.
Diane Alden

GAG me with a spoon. I would prefer root canal to Cramer..his groveling on John Stewarts Show made me like him even less. Cramer's big rant to the money babe on CNBC .. 'they know NOTHING..they know NOTHING.." also applies to Cramer.
DamienHoffman

LOL. "They know NOTHING!" LOL. Just like the investing advice in his own books, he doesn't walk any of his own talk.

Thanks, Diane!