6 ms·

I'm a noob when it comes to stock trading rules, but can someone explain how this is different than what Jim Cramer does on his show? Cramer has been exposed fo

I'm a noob when it comes to stock trading rules, but can someone explain how this is different than what Jim Cramer does on his show? Cramer has been exposed for knowingly giving people bad stock trading advice. Is it just that Cramer didn't do a blatantly obvious pump-and-dump like these influencers did?

dclusin 4y ago
Jim is most likely not trading the securities directly. The money he makes is from his tv contracts and other non-securities trading business probably. Maybe being paid by the companies to shill for them.
- abirch 4y ago
  Need to ask the SEC he invest in the SJIM ETF if that ever happens. They do the opposite of what he suggests.
- gowld 4y ago
  > Maybe being paid by the companies to shill for them. That would be quite illegal if not disclosed.
pmart123 4y ago
A lot comes down to subtle language syntax. For instance, you can say "we target 12% returns," but you can't say "we guarantee 12% returns." You can say "we out-performed the market by over 3% a year for each of the past ten years," but you can't say "we're going to out-perform the market because we have the past ten years." You can say "company X is a great business, and the stock looks cheap here," but you can't say "company X is a can't miss investment and an automatic double at this price."
- pmart123 4y ago
  You also can't promote a stock or position and do the opposite. For instance, if you ran a popular YouTube channel, you can't buy stock X before you post about why you own it, then post the promotional piece, and sell your position into your listener's buying it. If you are paid by the company, you would have to disclose this too, etc.
- kennend3 4y ago
  This is only part of the issue ("Guarantees"). The far larger and more important issue is disclosure laws. As the other guy posted, you cant recommend one thing and do another. "we recommend you BUY XYZ" while you are holding a lot of shares in this and sell into the buy market you created. You also cant offer recommendations without disclosing how you are compensated. I'm Canadian and more familiar with its rules / regulations but Canadian rules are often best practices used globally. https://www.iiroc.ca/news-and-publications/notices-and-guidance/research-report-disclosures-and-best-practices-0 https://www.iiroc.ca/news-and-publications/notices-and-guida... Disclosure of financial interest (clause 3608(2)(ii)) A Dealer must disclose whether any person involved in creating the content of a research report has an ownership interest in the subject issuer’s securities. When disclosing ownership interests, a Dealer is not required to include information relating to administrative or clerical staff involved in preparing a research report. Disclosure of remunerated services (clause 3608(2)(iii)) Clause 3608(2)(iii): does not require duplicate disclosure from the individuals when the Dealer discloses the services, and excludes normal investment advisory or trade execution services, such as an investment account by the issuer. Disclosure if making a market (clause 3608(2)(vi)) A Dealer must disclose if it is making a market in an equity or equity related security of the issuer. In addition, a Dealer must make the same disclosure in a fixed income research report if the Dealer is making a market in an equity or equity related security of the issuer.
  - LeifCarrotson 4y ago
    How does this relate to advertising? They're recommending people give their cash to buy a thing (I'm specifically thinking of the "Cash for gold" ads which are constantly playing on the conservative talk radio that our machinists listen to in the shop), while they're doing the opposite: giving away their gold to in exchange for your cash. Either they're acting against their own self-interest, sacrificing their incorruptible, safe gold for the risky, inflationary fiat currency, or they're lying about what they believe.
    - kennend3 4y ago
      This is the funny thing about the disclosure laws. The "influencers" may not have broken any trading rules, but their failure to disclose is an issue all to itself. > Either they're acting against their own self-interest, sacrificing their incorruptible, safe gold for the risky, inflationary fiat currency, or they're lying about what they believe. There is a lot to unpack here. But it comes down to this. You can advertise your services and not violate SEC laws, or you can do things which violate SEC rules. As for buying gold for cash : 1) This isnt covered by the SEC, (perhaps the CFTC?) 2) your post about "fiat currency" vs gold is unclear. You are aware that they don't just buy bold bricks, but unwanted jewelry, etc as well? If we replace "gold" with "used cars" does it work the same way? You are selling your unwated broken car which may be of some value to someone else.
deleted 4y ago
[deleted]
kobalsky 4y ago
I'm guessing that kramer and everyone around him is under the radar for taking opposite trades to what he's pitching, otherwise it would be a farce. Pump and dumpers get nailed to the wall because they sell while they are telling everyone to buy. They are not providing bad financial advise, they are defrauding people.
- JumpCrisscross 4y ago
  > kramer and everyone around him is under the radar for taking opposite trades to what he's pitching Unless disclosed, this is illegal. (EDIT: Never mind, idioms.)
  - sebmellen 4y ago
    I believe kobalsky intended "under the radar" to mean "under surveillance", so as to ensure such TV personalities are not placing trades that contradict what they're pitching.
    - mc32 4y ago
      I am under the impression at least some media employers bar their finance presenters from investing in stocks due to appearance of impropriety and in extremes conflict of interest.
    - wccrawford 4y ago
      Yeah, I agree. "Under the radar" usually means "hidden from view" and "under a microscope" means "under heavy scrutiny". I think the poster above just got the wrong idiom.
      - Kye 4y ago
        Short for flying under the radar (outside its lower range). It's what warplanes do for real to avoid detection.
- cyral 4y ago
  They also published false information about the stocks in order to justify why their followers should buy it.
rubyn00bie 4y ago
They didn’t disclose they were selling. Specifically they cite, 1. taking positions then 2. telling their audiences to buy (long) the same stock and then the important part selling when volume and/or price increases without disclosing it. Ex. 1. Buy crap stock “XYZ” with a low float (prone to volatile spikes with volume). 2. Tell audience to buy crap stock. 3. Sell crap stock. That’s manipulation and the SEC don’t take kindly to it. Cramer presumably does long things he talks about, or doesn’t pretend he will, and isn’t immediately selling it after discussing it on his show.
time_to_smile 4y ago
> didn't do a blatantly obvious For any crime it not being "blatantly obvious" is pretty essential to it not being prosecuted. I'm no fan of Jim Cramer, but he makes enough money just giving bad advice that there's no reason for him to also be secretly profiting from it illegally. In addition he's high profile enough that I'm sure plenty of people have looked into it hoping to find something. But if he was secretly profiting form it illegally then that illegal activity would have to be made "blatantly obvious" in order for him to be convicted, and the federal government doesn't like prosecuting unless they're near certain of a conviction. These influencers were performing an easy to observer and therefore easy to prosecute crime, which is why they are being charged.
robbitt 4y ago
It is all about how one discloses conflicts of interest with suggestions (aka ownership interests). Key phrase from the statement "without ever having disclosed their plans to dump the securities".
jcampbell1 4y ago
Cramer doesn’t invest in individual stocks, thus he has no conflicts of interest and wide 1st amendment protections. The important thing is to not lie about your financial interests. It is perfectly fine to take a short position, announce it, then proceed to trash the company’s management. It is fine to pump a stock if you disclose you have a position. The key issue is: “ the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.”
deleted 4y ago
[deleted]
ohgodplsno 4y ago
Crame gave to the world the Inverse Cramer ETF, which actually makes a lot of money.
- chollida1 4y ago
  > Crame gave to the world the Inverse Cramer ETF, which actually makes a lot of money. Can you show me the returns of this inverse Cramer ETF? As far as I can tell it hasn't been released yet, look for ticker SJIM. if this is true it makes the second part of your statement look like you just flat out made it up.
  - filoleg 4y ago
    I believe the parent comment was joking about making money by consistently taking positions opposite to what Cramer recommends. That ETF doesn't really exist afaik, yeah.
  - ohgodplsno 4y ago
    https://unusualwhales.com/etfs https://unusualwhales.com/etfs As it stands, shorting everything Cramer says to buy (and buying everything he says to short) has a +21% return rate. Yes, it requires you to use your fingers and manually buy/sell individual stocks instead of buying a single ETF. But then it wouldn't be HN without needlessly pedantic users.
kennend3 4y ago
I'm a former project manager who did work for a major banks compliance team, that same bank had an equity research division as well and so i can shed some light here for you. One of the biggest concerns is what you are doing in private vs what you are doing publicly. So lets say "Big Bank" says "we recommend XYZ with a target price of $19.99 by end of year, our recommendation is BUY" On the surface there is no issues with this, but lets say "BIG BANK" is LONG a million shares of XYZ.. Now you have a potential issue. You are telling your clients to BUY (upward pressure on the stock) while you have a big bet that the stock will go up. In the industry we refer to this as "talking your book" https://www.yourdictionary.com/talking-one-s-book https://www.yourdictionary.com/talking-one-s-book Over the years the rules have tighten when it comes to equity research and disclosing your position. Now to the issue with what took place here - The individuals advocating the stock, how were they compensated? What is their position on those stocks? Because this is UNCLEAR it is a violation of the SEC rules. Lastly, one thing still bothers me about equity research is the rare "Sell" recommendation. Very few equity research departments ever issue a "Sell" recommendation..
acomjean 4y ago
In the 90s it was “Dan Dorfman” on tv. There started to be some wondering were people feeding him info so the stocks he talked about on tv would move. It’s subtle, “learned” vs “heard” https://www.nytimes.com/1995/07/09/magazine/a-mover-of-markets.html?unlocked_article_code=BzkK77ytrlOHBq9jT764v1KuUXge4m5BeZvoiZhcn23gOYrUEFCJULH8s_7JFzHBpJpXpbqfjbWbS2bJErAfRltlNUDfUT1irp6lybXs7vAx0wnOJj8dq0kZClevE8_R78jy_tqOKmRjNUoS1B2j3U-KFk8tD8jr9wRAqj8cidiEh33iA16Z_P1tApWdlNc-670FoIXRlqgC_FwUHNzhh1gBQYRKdVDOArx49vM3MIRkhdw_7gtd4vrbTygQGCrkE6VZBspj_8VVcKmRICSMB5sz_bWAaeG9q9BsLPJcVA-0G_63j2rBNXNilE4r6c-h3Qr7CQXbxmhhXxuUHg&smid=share-url https://www.nytimes.com/1995/07/09/magazine/a-mover-of-marke...
pastor_bob 4y ago
>According to the SEC, since at least January 2020, seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord. These seven defendants allegedly purchased certain stocks and then encouraged their substantial social media following to buy those selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions. However, as the complaint alleges, when share prices and/or trading volumes rose in the promoted securities, the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them. They were literally pump-and-dumping. This is, to the letter, illegal. Cramer is not doing that. These 'analysts' on CNBC are supposed to follow disclosure rules.
sc68cal 4y ago
Less blatant, and also has connections and influence.
adrr 4y ago
No laws against incorrectly predicting the movement of securities. There are laws to prevent pump and dump of securities for profit. If Cramer was giving price predictions that benefited him without disclosing his positions, he would be violating the law. It is necessarily illegal to provide guidance of stock movement if you hold the stock. You need to say what positions your holding. Short sellers do this all the time legally.
- gowld 4y ago
  > is necessarily illegal to provide guidance of stock movement if you hold the stock ... unless you disclose your position?
  - dimitrios1 4y ago
    I doubt Cramer personally invests at all these days. He likely goes through either a firm or a managed fund, providing even more shielding. edit: yeah https://www.cnbc.com/2022/05/04/jim-cramer-how-he-invests-his-own-money-and-why-half-is-in-cash.html https://www.cnbc.com/2022/05/04/jim-cramer-how-he-invests-hi...
- s1artibartfast 4y ago
  I don't think you even need to disclose your positions, you just can't have positions that are contradictory to the information that you disclose.

dclusin 4y ago

Jim is most likely not trading the securities directly. The money he makes is from his tv contracts and other non-securities trading business probably. Maybe being paid by the companies to shill for them.

abirch 4y ago
Need to ask the SEC he invest in the SJIM ETF if that ever happens. They do the opposite of what he suggests.
gowld 4y ago
> Maybe being paid by the companies to shill for them. That would be quite illegal if not disclosed.

pmart123 4y ago

A lot comes down to subtle language syntax. For instance, you can say "we target 12% returns," but you can't say "we guarantee 12% returns." You can say "we out-performed the market by over 3% a year for each of the past ten years," but you can't say "we're going to out-perform the market because we have the past ten years." You can say "company X is a great business, and the stock looks cheap here," but you can't say "company X is a can't miss investment and an automatic double at this price."

pmart123 4y ago
You also can't promote a stock or position and do the opposite. For instance, if you ran a popular YouTube channel, you can't buy stock X before you post about why you own it, then post the promotional piece, and sell your position into your listener's buying it. If you are paid by the company, you would have to disclose this too, etc.
kennend3 4y ago
This is only part of the issue ("Guarantees"). The far larger and more important issue is disclosure laws. As the other guy posted, you cant recommend one thing and do another. "we recommend you BUY XYZ" while you are holding a lot of shares in this and sell into the buy market you created. You also cant offer recommendations without disclosing how you are compensated. I'm Canadian and more familiar with its rules / regulations but Canadian rules are often best practices used globally. https://www.iiroc.ca/news-and-publications/notices-and-guidance/research-report-disclosures-and-best-practices-0 https://www.iiroc.ca/news-and-publications/notices-and-guida... Disclosure of financial interest (clause 3608(2)(ii)) A Dealer must disclose whether any person involved in creating the content of a research report has an ownership interest in the subject issuer’s securities. When disclosing ownership interests, a Dealer is not required to include information relating to administrative or clerical staff involved in preparing a research report. Disclosure of remunerated services (clause 3608(2)(iii)) Clause 3608(2)(iii): does not require duplicate disclosure from the individuals when the Dealer discloses the services, and excludes normal investment advisory or trade execution services, such as an investment account by the issuer. Disclosure if making a market (clause 3608(2)(vi)) A Dealer must disclose if it is making a market in an equity or equity related security of the issuer. In addition, a Dealer must make the same disclosure in a fixed income research report if the Dealer is making a market in an equity or equity related security of the issuer.
- LeifCarrotson 4y ago
  How does this relate to advertising? They're recommending people give their cash to buy a thing (I'm specifically thinking of the "Cash for gold" ads which are constantly playing on the conservative talk radio that our machinists listen to in the shop), while they're doing the opposite: giving away their gold to in exchange for your cash. Either they're acting against their own self-interest, sacrificing their incorruptible, safe gold for the risky, inflationary fiat currency, or they're lying about what they believe.
  - kennend3 4y ago
    This is the funny thing about the disclosure laws. The "influencers" may not have broken any trading rules, but their failure to disclose is an issue all to itself. > Either they're acting against their own self-interest, sacrificing their incorruptible, safe gold for the risky, inflationary fiat currency, or they're lying about what they believe. There is a lot to unpack here. But it comes down to this. You can advertise your services and not violate SEC laws, or you can do things which violate SEC rules. As for buying gold for cash : 1) This isnt covered by the SEC, (perhaps the CFTC?) 2) your post about "fiat currency" vs gold is unclear. You are aware that they don't just buy bold bricks, but unwanted jewelry, etc as well? If we replace "gold" with "used cars" does it work the same way? You are selling your unwated broken car which may be of some value to someone else.

deleted 4y ago

[deleted]

kobalsky 4y ago

I'm guessing that kramer and everyone around him is under the radar for taking opposite trades to what he's pitching, otherwise it would be a farce. Pump and dumpers get nailed to the wall because they sell while they are telling everyone to buy. They are not providing bad financial advise, they are defrauding people.

JumpCrisscross 4y ago
> kramer and everyone around him is under the radar for taking opposite trades to what he's pitching Unless disclosed, this is illegal. (EDIT: Never mind, idioms.)
- sebmellen 4y ago
  I believe kobalsky intended "under the radar" to mean "under surveillance", so as to ensure such TV personalities are not placing trades that contradict what they're pitching.
  - mc32 4y ago
    I am under the impression at least some media employers bar their finance presenters from investing in stocks due to appearance of impropriety and in extremes conflict of interest.
  - wccrawford 4y ago
    Yeah, I agree. "Under the radar" usually means "hidden from view" and "under a microscope" means "under heavy scrutiny". I think the poster above just got the wrong idiom.
    - Kye 4y ago
      Short for flying under the radar (outside its lower range). It's what warplanes do for real to avoid detection.
cyral 4y ago
They also published false information about the stocks in order to justify why their followers should buy it.

rubyn00bie 4y ago

They didn’t disclose they were selling. Specifically they cite, 1. taking positions then 2. telling their audiences to buy (long) the same stock and then the important part selling when volume and/or price increases without disclosing it. Ex. 1. Buy crap stock “XYZ” with a low float (prone to volatile spikes with volume). 2. Tell audience to buy crap stock. 3. Sell crap stock. That’s manipulation and the SEC don’t take kindly to it. Cramer presumably does long things he talks about, or doesn’t pretend he will, and isn’t immediately selling it after discussing it on his show.

time_to_smile 4y ago

> didn't do a blatantly obvious For any crime it not being "blatantly obvious" is pretty essential to it not being prosecuted. I'm no fan of Jim Cramer, but he makes enough money just giving bad advice that there's no reason for him to also be secretly profiting from it illegally. In addition he's high profile enough that I'm sure plenty of people have looked into it hoping to find something. But if he was secretly profiting form it illegally then that illegal activity would have to be made "blatantly obvious" in order for him to be convicted, and the federal government doesn't like prosecuting unless they're near certain of a conviction. These influencers were performing an easy to observer and therefore easy to prosecute crime, which is why they are being charged.

robbitt 4y ago

It is all about how one discloses conflicts of interest with suggestions (aka ownership interests). Key phrase from the statement "without ever having disclosed their plans to dump the securities".

jcampbell1 4y ago

Cramer doesn’t invest in individual stocks, thus he has no conflicts of interest and wide 1st amendment protections. The important thing is to not lie about your financial interests. It is perfectly fine to take a short position, announce it, then proceed to trash the company’s management. It is fine to pump a stock if you disclose you have a position. The key issue is: “ the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.”

deleted 4y ago

[deleted]

ohgodplsno 4y ago

Crame gave to the world the Inverse Cramer ETF, which actually makes a lot of money.

chollida1 4y ago
> Crame gave to the world the Inverse Cramer ETF, which actually makes a lot of money. Can you show me the returns of this inverse Cramer ETF? As far as I can tell it hasn't been released yet, look for ticker SJIM. if this is true it makes the second part of your statement look like you just flat out made it up.
- filoleg 4y ago
  I believe the parent comment was joking about making money by consistently taking positions opposite to what Cramer recommends. That ETF doesn't really exist afaik, yeah.
- ohgodplsno 4y ago
  https://unusualwhales.com/etfs https://unusualwhales.com/etfs As it stands, shorting everything Cramer says to buy (and buying everything he says to short) has a +21% return rate. Yes, it requires you to use your fingers and manually buy/sell individual stocks instead of buying a single ETF. But then it wouldn't be HN without needlessly pedantic users.

kennend3 4y ago

I'm a former project manager who did work for a major banks compliance team, that same bank had an equity research division as well and so i can shed some light here for you. One of the biggest concerns is what you are doing in private vs what you are doing publicly. So lets say "Big Bank" says "we recommend XYZ with a target price of $19.99 by end of year, our recommendation is BUY" On the surface there is no issues with this, but lets say "BIG BANK" is LONG a million shares of XYZ.. Now you have a potential issue. You are telling your clients to BUY (upward pressure on the stock) while you have a big bet that the stock will go up. In the industry we refer to this as "talking your book" https://www.yourdictionary.com/talking-one-s-book https://www.yourdictionary.com/talking-one-s-book Over the years the rules have tighten when it comes to equity research and disclosing your position. Now to the issue with what took place here - The individuals advocating the stock, how were they compensated? What is their position on those stocks? Because this is UNCLEAR it is a violation of the SEC rules. Lastly, one thing still bothers me about equity research is the rare "Sell" recommendation. Very few equity research departments ever issue a "Sell" recommendation..

acomjean 4y ago

In the 90s it was “Dan Dorfman” on tv. There started to be some wondering were people feeding him info so the stocks he talked about on tv would move. It’s subtle, “learned” vs “heard” https://www.nytimes.com/1995/07/09/magazine/a-mover-of-markets.html?unlocked_article_code=BzkK77ytrlOHBq9jT764v1KuUXge4m5BeZvoiZhcn23gOYrUEFCJULH8s_7JFzHBpJpXpbqfjbWbS2bJErAfRltlNUDfUT1irp6lybXs7vAx0wnOJj8dq0kZClevE8_R78jy_tqOKmRjNUoS1B2j3U-KFk8tD8jr9wRAqj8cidiEh33iA16Z_P1tApWdlNc-670FoIXRlqgC_FwUHNzhh1gBQYRKdVDOArx49vM3MIRkhdw_7gtd4vrbTygQGCrkE6VZBspj_8VVcKmRICSMB5sz_bWAaeG9q9BsLPJcVA-0G_63j2rBNXNilE4r6c-h3Qr7CQXbxmhhXxuUHg&smid=share-url https://www.nytimes.com/1995/07/09/magazine/a-mover-of-marke...

pastor_bob 4y ago

>According to the SEC, since at least January 2020, seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord. These seven defendants allegedly purchased certain stocks and then encouraged their substantial social media following to buy those selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions. However, as the complaint alleges, when share prices and/or trading volumes rose in the promoted securities, the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them. They were literally pump-and-dumping. This is, to the letter, illegal. Cramer is not doing that. These 'analysts' on CNBC are supposed to follow disclosure rules.

sc68cal 4y ago

Less blatant, and also has connections and influence.

adrr 4y ago

No laws against incorrectly predicting the movement of securities. There are laws to prevent pump and dump of securities for profit. If Cramer was giving price predictions that benefited him without disclosing his positions, he would be violating the law. It is necessarily illegal to provide guidance of stock movement if you hold the stock. You need to say what positions your holding. Short sellers do this all the time legally.

gowld 4y ago
> is necessarily illegal to provide guidance of stock movement if you hold the stock ... unless you disclose your position?
- dimitrios1 4y ago
  I doubt Cramer personally invests at all these days. He likely goes through either a firm or a managed fund, providing even more shielding. edit: yeah https://www.cnbc.com/2022/05/04/jim-cramer-how-he-invests-his-own-money-and-why-half-is-in-cash.html https://www.cnbc.com/2022/05/04/jim-cramer-how-he-invests-hi...
s1artibartfast 4y ago
I don't think you even need to disclose your positions, you just can't have positions that are contradictory to the information that you disclose.