CNBC suspends analyst over ethics
Questions over Jim Cramer's WavePhore comments
Last Update: 1:32 PM ET Dec 16, 1998
NEW YORK (AP) -- CNBC suspended one of its guest analysts
Wednesday after ethics questions arose about whether he was trading and
commenting on a stock at the same time.
The cable TV business network said the move involving James Cramer
had to do with comments he made two weeks ago about the stock of
Internet company WavePhore Inc. (WAVO)
He denies any wrongdoing.
Cramer, a professional money manager, is
expected to return as a biweekly guest
commentator after the suspension ends, although no
timetable has been set, CNBC spokesman George
Jamison said.
WavePhore, a developer of online broadcasting
technology, complained that Cramer said on the
Dec. 2 CNBC program "Squawk Box" that he had
tried to "short" the company's stock - a legal
investment strategy based on the hope that a
company's stock price will fall.
In short-selling, an investor borrows shares,
typically from a broker, and sells them immediately,
hoping to buy shares of the company back at a
lower price, repay the broker and pocket the
difference.
On the show, Cramer said a recent rise in
WavePhore's stock was based on speculation and might not last.
He angrily denied trying to short sell the stock and said he did not mean to
give that impression on the program. He explained that he had simply
asked the investment firm Goldman Sachs if there was any WavePhore
stock available to borrow because he was investigating whether other
investors were short-selling the stock.
Cramer said he does not own any shares of WavePhore and said he
discloses all of his holdings to CNBC and the various publications he
writes for.
"I have 100 percent disclosure at all times. I would like to see who else
has that," he said.
Cramer runs the $340 million investment fund Cramer, Berkowitz & Co.
and is widely known for his columns in GQ, The New York Observer
and TheStreet.Com, the Internet investment news service he co-founded
two years ago.
WavePhore stock had soared 72 percent to 15 1/4 the day before
Cramer's Dec. 2 appearance.
Since the show, WavePhore stock has fallen and was trading at 8 1/16
Wednesday morning. WavePhore has asked the Nasdaq and the
Securities and Exchange Commission to investigate the trading prior to
Cramer's remarks. |
