Financial Media Watchdog/Lapdog

James Cramer printed a few thoughts on the mutual fund scandal in New York mag last week. A month ago on this blog I wondered what he would have to say about the scandal since he not only ran a hedge fund, but owned TheStreet.com, has had his own slot on CNBC and sold his financial journalism "skills" to numerous other outfits. So I was wondering if he would admit to knowing hedge funds were getting mutual fund managers to do some shady after-hours love nesting at the expense of the average investor.

So in his column, he admits not that he knew it was going on, only that he knew how to do it, but decided not to.

I knew that if you could somehow take advantage of the stupid pricing of mutual funds, done at 4 p.m., even when the markets were open 24 hours, it would be like stealing candy from a baby. But that would require three things: a hedge-fund manager nefarious enough to be willing to steal money from passive mutual-fund investors; a mutual fund that cared so little about its core constituents that it would gladly journal, or transfer electronically, the profits from the mom-and-pops to the hedge funds if they placed $10 million to $20 million in “slow money” with another boring mutual-fund offering; and an SEC that wouldn’t care if it found out about it or wouldn’t understand it if it did uncover it.

He also asserts that eventhough he ran a $450 million hedge fund, he's just an average investor like you and me: "We, the unwashed massess ... ." Yet later he gets back to business: "When I was a hedge-fund manager, I was always fearful of the SEC. The commission was consistently toughest on hedge-fund managers, even though we labored only for rich people. Funny thing, it protected the rich in hedge funds but didn’t give a hoot about the poor slobs in mutual funds."

So Cramer, what I still want to know is this: Did you know this stuff was going on while it was happening and if so, why didn't you ever report it?
- posted by Amy @ 12/11/2003 11:41:00 AM