Jim Cramer is a Complicated Man
March 28th, 2008 by Patrick Byrne
deepcapture.com
I would rather try describing what an oyster tastes like than analyze Jim Cramer. Analyze him I must, however, and will confine myself to two prefatory comments:
1) Jim is a complicated man. I say this neither to excuse nor condemn him. Instead, I am acknowledging that to my eye Jim Cramer’s moral code is written in hieroglyphics, and I would no more try to judge that code than would an anthropologist pass judgment on the Pelazon female rite-of-passage ceremonies of Ticuna Indians. In the face of something so foreign, one may only say, it is what it is. The precise reason why Cramer exists beyond good and evil, however, must wait until the end of this piece.
2) The first lesson I had in securities law was given me by Gordon Macklin, a revered figure within modern Wall Street history: he built NASDAQ, and was the Co-CEO of Hambrecht & Quist. I was fortunate enough to have Mr Macklin as a kind of Dutch Uncle to me from the time that I was a teenager until his passing in early 2007. When I was a lad I once asked Mr. Macklin, “Do companies ever do this-or-that in order to make their stocks go up?” Macklin replied, “There is one thing you need to know about securities law: anytime someone purposefully does something in order to make a stock go up or go down, he is doing something illegal. You can go to law school and study it for years, but that’s what it boils down to. You make bets on stocks, but you never purposefully make the price of a stock move in either direction. It’s manipulation. It’s illegal. That is the first thing you need to know about the stock market.”
Years later I went to work for one of the great Graham-Dodd value investors of Wall Street. From the behavior of him and those in his firm the same lesson was reinforced, and I internalized it to the point that it would have seemed strange even to mention it. In fact, I would put it on par with knowledge among health care workers that one is supposed to wash one’s hands between seeing patients, and when I left Wall Street I would have supposed it as rare to find someone there who did not know that one does not purposefully move the prices of stocks as it would be to find a nurse who did not know about germs.
Jim Cramer has spent his investing career manipulating stock prices up and down, and his career as a journalist explaining how he does it. Thus to this untutored eye, Cramer’s public statements appear to be confessions of wildly illegal acts. So my second prefatory remark is that Jim Cramer’s continued freedom bewilders me.
I felt that, in fairness to Cramer, I should be clear about those two points. I also believe that, deep down, Jim will be grateful for what I write here.
JIM’S BACKGROUND AND EARLY MOMENTUM
Jim Cramer grew up in Philadelphia, Pennsylvania, then attended Harvard, where he was editor of the Harvard Crimson. After graduatiing in 1977 he spent two years as a general assignment reporter, first in Florida for the Tallahassee Democrat and then in California for the Los Angeles Herald Examiner. He began investing in 1979. In 1981 Cramer entered Harvard Law, but spent much of his time there thinking about stocks and investing. “By the end of the first year,” he later wrotes, “I was reviewing the portfolios of most of my professors” (Jim Cramer, Confessions of a Street Addict, New York: Simon & Schuster, 2002, page 14). After a summer associate position at the prestigious New York law firm of Fried Frank, and some time doing legal research for Alan Dershowitz, Cramer decided to shift from law to business.
Cramer’s early investment success attracted the attention of Martin Peretz, owner and editor of The New Republic and friend of Michael Steinhardt, and in 1982, Peretz handed Cramer a check for $500,000, for Cramer to invest. In the summer of 1983 Cramer interned at Goldman Sachs, whereat Cramer learned the plumbing of the stock market. In 1984, when Cramer graduated from Harvard Law, Peretz threw Cramer a graduation party attended by Peretz’s wealthy friends, many of whom placed money with Cramer. After graduating Cramer again went to work for Goldman, where his primary job was new-client acquisition (among the wealthy clients Cramer brought to Goldman was Steve Ballmer, who recently became the CEO of Microsoft). Cramer viewed himself as a young go-getter, and claims that some of Bud Fox’s exploits in the movie Wall Street were inspired by an interview the film-makers did with Cramer (Confessions of a Street Addict, page 33).
While at Goldman, Cramer wrote short financial pieces for The New Republic. Among them was a positive book review for Peretz’s friend Ivan Boesky. However, Cramer became unsatisfied with life at Goldman: he preferred picking stocks to selling the picks of the Goldman Research Department. In 1986, after a negative article about Cramer appeared in The New York Times, Cramer decided to leave Goldman Sachs and set up his own hedge fund with Larry Levy. Peretz, who still had money with Cramer, helped Cramer’s new fund raise capital.
“I went to see Marty’s good friend Michael Steinhardt, the same man whom I had told that Reebok was a great long and not a great short. Steinhardt had not covered the Reebok. He had let it run, against my advice. He told me, however, that he would have saved millions of dollars had he listened to me and that he wanted to put money with me and give me office space so I could learn how to trade. I told him I knew how to trade. He told me no, I knew how to spot good ideas; I had no idea really how to run money, even though I had been trading for almost a decade.” (Confessions of a Street Addict, page 47.)
CRAMER MEETS A GAL AFTER HIS OWN HEART
Cramer started the fund in a corner of Steinhardt’s office in April 1987. During his first week he suffered huge losses, dropping 9.9%. John Lattanzio, one of Steinhardt’s main traders, offered to help Cramer out of trouble. Lattanzio advised Cramer to sell everything, cover his positions, and start over. Fatefully, Lattanzio also suggested that Cramer study other veteran Steinhardt traders, among them, Karen Backfisch (Confessions of a Street Addict, pages 51-52).
Karen Backfish had graduated from the State University of New York at Stony Brook and went on to work at Lehman Brothers. She had risen to become an assistant vice president at Lehman, helping portfolio managers. Karen’s boss, Mark Howard, was hired away to Steinhardt partners, and he brought Karen with him. As Cramer frequently makes clear, she showed him the ropes at Steinhardt’s (in fact, he has frequently called her, “The Trading Goddess”).
“How she did it was by gaming Wall Street, trying to anticipate moves of analysts before they were made, and placing big bets on the direction that analysts were going to go. That way, she said, you always had an edge, you never owned anything idly, and you always had an exit strategy.
“I said that’s all well and good, but no analyst is going to give you a call before announcing his position. You can’t get analysts to tell you what they are going to do beforehand.
“Of course, she said. So what you had to do was make dozens of calls to brokers and analysts every day to ask them what they thought of stocks. She said you looked for situations where the analysts were growing more positive and you fed them positive information that you got from others. You pitted them against one another. You told them that someone else was going to upgrade. If you could be sure they were warming up to a story, or if you caught them on the phone before they told their sales forces that their earnings estimates were too high or too low, you might have something.
“Karen explained to me that the analyst game was a game of sponsorship. Analysts like to get behind stocks and bull them. You have to get in on the ground floor when they start their sponsorship campaign. If Merrill is the sponsor of a stock, it could be good for 5 points. If Goldman sponsored something, it could be good for 10. You want to buy something and flip it—sell it immediately—into the sponsorship. That’s the only sure thing on Wall Street.
“When I asked her how we could find out about all of these wonderful things when I was jut a little hedge fund manager, she said one word: ‘commish.’… Commissions, she explained, determined what you are told, what you will know, and how much you can find out. If you do a massive amount of commission business, analysts will return your calls, brokers will work for you, and you will get plenty of ideas to make money, on both a short- and long-term basis… Commissions greased everything.” (Confessions of a Street Addict, pages 51-52.)
Again, I find this perplexing because, to this admittedly non-lawyerly eye, it is a description of a crime. It would be illegal for analysts at Merrill Lynch or Goldman Sachs to reciprocate large trading commissions paid to their firms by tipping off traders about upcoming “sponsorship” of various stocks, thus permitting those traders to “sell into the sponsorship.” So is, I reckon, “pitt[ing] analysts against one another” by “feeding” them information (”You told them that someone else was going to upgrade”) if is untrue, and arguably, even if it is true but done simply to move a stock (and as we shall see, the veracity of any of this matters matters little to Jim). Even if it’s ,”the only sure thing on Wall Street,” it is illegal. Yet Jim tells this story, proudly, in his own book. The read may also note how closely it matches the story I told inabout Steinhardt, and how it is to work at one of the Wall Street brokerages and be on the receiving end of such calls. “Confessions” indeed.
In 1988, Karen joined Cramer & Company. The fund performed well at first, and Jim and Karen married. In 1990 she became pregnant but kept working. In 1992, Cramer & Co. hired Jeff Berkowitz from Columbia Business School. Cramer described their evolving business model succinctly:
“We had it down to a science in 1992: my wife would pick stocks that technically looked ready to go up, or she would keep track of merchandise to see what was down to tag ends. She would then generate a list of stocks that could move quickly on good news. Jeff would then go to work calling the companies to try to find anything good we could say about them. I would call the analysts to see I they were hearing anything. When we found a stock that looked ready technically to break out, or where the supply had been mopped up, and Jeff found something positive at the company, and I knew the analyst community didn’t know anything positive, we would load up with call options and common stock and then give the good news to our favorite analysts who liked the stock so they could go do their promotion. That would get the buzz going and we would then be able to liquidate the position into the buzz for a handsome profit.” (Confessions of a Street Addict, page 61).
In his pride at mastering “down to a science” the art of manipulating public interest, Jim left unstated how he felt about the public that, once its interest had been so stimulated, found itself on the other side of the trades from which Jim was profiting. In fact, Jim seems to have a tin-ear for his own words, because, as I said earlier, what he describes above would have seemed patently illegal to Wall Street folks of a generation ago, for the reasons I described at the outset of this piece.
Years later, in a venue he apparently did not anticipate would become public, Jim described how he really felt about those compliant analysts and reporters he manipulated artfully and with such apparent ease. Here is a transcript of the event. For the full video, see here. Or, just go here and pick whichever part of the video grabs you. It matters not where you start it, as throughout it Jim Cramer displays his comfort with stock manipulation in ways that he claims no no one else will admit, but which are illegal and beyond the capacity of the SEC to grasp, as he sees it. Also throughout it Jim displays his thorough comfort at fleecing the rubes (that is, cheating other market participants by manipulating stocks): in fact, the video is an exercise in Jim’s pride in his abilities in that direction.
NICHOLAS MAIER AND TRADING WITH THE ENEMY
In 1994 Cramer hired Nicholas Maier as a favor to Marty Peretz, who was close with the Maier family. Maier worked for Cramer until 1998, and in 2002, around the time that Cramer was breaking into widespread public consciousness, Maier published a tell-all book about his years with Cramer: Trading with the Enemy: Seduction and Betrayal on Jim Cramer’s Wall Street (New York: HarperCollins, 2002) It contained detailed description of Cramer’s manic and abusive style. For example, Maier recounted the following scene after a trader at Cramer’s firm, Mark Kantor, executed a buy order at a price one-quarter point higher than what Cramer had expected, a total difference of $625:
“‘The broker fucked us, big time!’
“‘The eighth offering was fading when we called,’ Mark explained.
“Jim bit down on his lower lip as his hands clench into fists. He leaned forward to get closer to Mark, and started banging on the top of his monitors. The crown of his balding skull reddened as he yelled at the top of his lungs in a high-pitched whine.
“‘I told you they fucked us! Fucked us, fucked us, fucked us!’
“‘Listen to me.’ With piercing eyes Jim scanned our sober faces. ‘This is not some fucking joke!’ he screamed, spit flying from his mouth. ‘We are at war. We are in a foxhole.’ He flung out his hands. ‘Everyone out there is the enemy!’
“Mark nodded to show Jim that he understood. That wasn’t what Jim wanted. He started smashing his phone over and over on the desk in front of him. He lifted a monitor and heaved it like a shot put. After flying several feet, it shattered on the floor.” (Trading with the Enemy, page 29).
Maier also described Cramer’s questionable trading ethics. One passage noted a brush with naked short selling:
Jim turns toward his head trader. “Mark, sell ten thousand Bristol Myers.”
“We never bought any Bristol Myers,” Mark replies.
“We own the calls,” Jim corrects Mark impatiently, aggravated by the delay.
“So sell it short?” Mark asks for clarification. Mark knows that according to the SEC rule book, selling stock you don’t already own (even if you do own the call options) must be marked and executed as a short sale.
“You are confusing me with someone who gives a shit. Just sell it! I said hit the fucking bid!” adds Jim, not interested in wasting time over petty semantics. Skirting the “plus tick” rule in this case won’t necessarily make us a lot of extra money, but in Jim’s eyes, the rule is still an unenforceable annoyance. “And don’t ever ask me that again!” (Trading With the Enemy, pages 70-71).
Please put a pin in this expression of Jim Cramer’s concern for this somwhat obscure “uptick rule”. I will return to it later.
Maier also describes Jim’s cozy yet perilous relationship with analysts at brokerage firms. When one unlucky analyst forgot to call Jim before he downgraded a stock, Jim screamed into the phone:
“All I pay you too much fucking money for is … to pick up the goddamn phone and call me—call me—before you call anyone else.” (Trading With the Enemy, page 86).
In Maier’s artful summary:
“Jim didn’t care whether an analyst was ultimately right in his or her opinion. He just wanted to take advantage of the closest thing to a sure bet in the stock market today: the short-term effect any commentary might have.” (Trading With the Enemy, page 86).
Presumably, the reader sees the consistency between this story and the one in “Michael Steinhardt - ‘When the Bad Guys Came to Town’” about the broker whom Steinhardt berated in precisely the same manner. It would seem that Steinhardt taught Karen and Karen taught Jim, who wanted “The Edge” just as much as Steinhardt had.
In fact, Trading with the Enemy is replete with examples of how analysts release information to favored insiders before a formal report is released. Maier recounts a social evening with a Smith Barney analyst. The analyst tells Maier that the Smith Barney analyst is going to change a “hold” rating on a stock to a “buy,” then adds this:
“Listen, Sherlock, just remember one thing. If you’re going to buy it, buy it with us. We get a cut of every trade you do in the stocks we cover.
“Thus there was a quantifiable reason that such information was ‘leaked’ to good clients like Cramer & Company. This senior analyst received a direct kickback from getting Cramer & Company to traffic in stocks his company covered. Joe helped me to make money, and I was expected to return the favor. By the time the stock was upgraded from a hold to a strong buy, Cramer & Company had bought fifty thousand shares. All the trades were placed with Smith Barney.” (Trading With the Enemy, page 90.)
JIM’S BEHAVIOR IS FINALLY TOO OBVIOUS EVEN FOR THE SEC TO IGNORE
While Cramer & Co. was establishing itself as a viable hedge fund, Jim Cramer continued working on the side as a financial journalist, in an lapse of multiple social institutions (e.g., editorial judgment, regulation, and perhaps law enforcement). In 1990 the Wall Street Journal approached Cramer and asked him to help found a new opinion magazine about stocks and personal finance. Jim Stewart, Steve Swartz, and Norm Perlstein wanted a “real live money manager” to write for them. Cramer accepted their offer.
In 1995, Jim Cramer’s two vocations—money manager and journalist— finally collided in a way that resulted in an SEC investigation. Cramer and Maier tell the story in different ways. I will relate the events from both of their perspectives.
In February 1995, Cramer wrote a piece for his “Unconventional Wisdom” column in SmartMoney. The piece was entitled “Pity the Poor Orphans”, and focused on four stocks that lacked coverage by Wall Street analysts: Canonie Environmental, Hogan Systems, Rexon, and UFP Technologies. In his column Jim made strong claims about these stocks, predicting, for example, that “when the move comes, Canonie… might triple in price” and that UFTP would “grow like wildfire.” (Trading With the Enemy, page 107).
After the article appeared, all four stocks jumped between 30 and 50 percent in a few days. Unfortunately, the article had neglected to mention that Cramer had large positions in all four stocks. Shortly thereafter, Howard Kurtz of the Washington Post wrote a story about how Cramer had used his position at SmartMoney to enrich himself. CNBC’s Dan Dorfman also called for an investigation.
Eventually the SEC opened a formal investigation into Cramer on three grounds:
1) Whether Cramer was allowed to write about stocks he owned;
2) Why had Cramer failed to disclose his ownership;
3) Whether Cramer took money from the companies to write favorable articles.
For his part, Cramer claimed that the column’s omission of any mention that he owned large positions in the stocks he was touting was an oversight of the publisher, and that he, Cramer, had immediately contacted DowJones to notify them that his article moved the stocks. He also claims he placed a call to his lawyer, Bruce Birenboim, a partner at Paul Weiss. Cramer consulted Arthur Liman, lead counsel for Michael Milken, for legal advice during the SEC investigation. According to Cramer, Liman told Cramer that this was just a “hangnail” and he had nothing to worry about. (Confessions of a Street Addict, page 74.)
DowJones conducted its own internal investigation. Eventually, DowJones wrote a letter to the SEC accepting blame for failing to disclose Cramer’s ownership in the article, and the inquiry ended. Dow Jones also paid for Cramer’s legal fees, about $700,000. (Confessions of a Street Addict, page 81.)
Cramer has minimized the significance of the entire episode, writing, “They were tiny stocks that I thought represent value because they weren’t being promoted or sponsored by any firm.” (Confessions of a Street Addict, page 70.) In later years, Cramer would go on to claim that it was obvious from the tone of the article that he owned the stocks, and additionally, that the episode was part of a conspiracy against him driven by Rupert Murdoch and News Corp (Katherine Mieszkowski, “It was just stupid,” Salon.com, June 4, 2002).
Unsurprisingly, having observed the preceding events from the inside, Nick Maier tells a different story:
“…none of the orphans had been winners for the firm until then. Jim’s typical approach was to constantly trade in and out of the market. When he started picking away at these names, he had no intention of ever owning 10 percent of Canonie, Hogan, Rexon, or UFP Technologies. Because they performed so poorly, we continually averaged down, and eventually acquired more shares than we ever imagined we would. Once that happened, because of their illiquid status, it became impossible to sell even had we wanted to…There were plenty of days before Jim wrote the article, and even more after, that he criticized those stocks as perennial ‘pieces of shit’ and ‘worthless losers.’” (Trading With the Enemy, page 110.)
In short, Maier is contending that advice Cramer was giving the public under the guise of helping them manage their savings (”SmartMoney“) was actually being driven by Cramer’s need to dump his own positions without cratering the market. When a trusting public acted on Jim’s tip and bought shares, he dumped his shares onto the public. The only lesson Cramer learned from the “four orphans” incident, Maier claims, was that he, Cramer, had the power to move stocks through the press.
Cramer went on to build controversial relationships with CNBC news anchors, including Maria Bartiromo and David Faber. Cramer credits Bartiromo with bringing him to CNBC (Confessions of a Street Addict, page 126). Maier has clarified how Cramer used these relationships:
“Jim’s strategy was to put in his order to buy a stock with Mark and then dial Maria. As soon as she announced the news on television, the stock would often jump. Jim then had Mark peel off whatever we had bought.” (Trading With the Enemy, page 124-125.)
Note the consistency in this progression from Michael Steinhardt to Karen Backfish to Jim Cramer. Steinhardt had a taste for “The Edge,” that is, knowing what analysts were going to say before the public knew. Then for Karen Backfish and Jim Cramer the Edge became telling analysts what to say. Eventually Cramer’s edge became actually writing the news himself, and having it appear in his own columns, or spoon-feeding it to compliant reporters who would regurgitate it on cue.
Nicholas Maier worked for Cramer until 1998. He left, and his tell-all book was published in 2002, shortly after Cramer’s Confessions of a Street Addict, at which point Journalist Jim Cramer’s commitment to the First Amendment snapped. He sued HarperCollins and Nick Maier for statements about Cramer’s dealings in a company called Western Digital. HarperCollins proceeded to buy up all copies of the book that were already in the market (David D. Kirkpatrick, “HarperCollins To Junk Copies Of a New Book Cited as Libel,” New York Times, March 16, 2002). HarperCollins then did one reprint of the book, but it was missing three pages.Trading with the Enemy is now only available used, in secondary markets (word is that in some circles folks will pay big money for any copy of the original book which includes those three pages).
After the publication of Trading With the Enemy and in the face of various forms of intimidation, Nick Maier did his best to disappear from the face of the earth. Some years ago I tracked Nick down: he was living a quiet, modest off-the-grid life (and had found one of my favorite places in the world to do it). Given that some years had elapsed between the legal mushroom cloud under which Nick had disappeared from New York and the time I located him, I thought he might be willing to meet. I asked an associate to contact Nick. Over the phone, Nick was open and forthcoming. Between that day, however, and the moment several days later when my associate arrived on his doorstep, Nick’s attitude had changed. According to Nick, just the day before, “A plane full of New York lawyers had descended” on him, and he would be unable to speak.
Nick had closed his book with a personal reflection: “I understand that a lot of people are reading this book because of James Cramer, but it was written to leave him behind.” (Trading with the Enemy, page 192.) I apologize, Nick, for any trouble I reintroduced into your life that day.
THESTREET.COM
In 1996 Cramer co-founded TheStreet.com with Marty Peretz. Cramer and Peretz wanted to challenge newswires like Reuters, DowJones, and Bloomberg for a fraction of the fee. Cramer envisioned “an on-line newspaper that reported and commented on stocks in real time” (Confessions of a Street Addict, page 84). Early employees of the TheStreet.com included well-regarded journalists such Michael Lewis, Ravi Desai, and Andrew Drake.
The first few years at TheStreet.com were difficult. Cramer and Peretz both spent millions sustaining the company, and eventually had a falling out. Cramer claims his physical absence from TheStreet.com—a self-imposed rule due to his primary job as a fund manager—led to waste and inefficiency. In 1997 the company finally reached 10,000 subscribers, a turning point. “We were pleased to rope in Herb Greenberg, the finest investigative journalist in the country…a hire which further boosted traffic.” (Confessions of a Street Addict, page 137). I believe, and I will later show you why I believe, that Herb Greenberg is,in fact The Worst Business Journalist in America. There may be no one in the same ballpark as Herb, as far as that goes. But that is a story for a later date.
1999 was an eventful year for Cramer and TheStreet.com. Cramer and Peretz made up after their bitter falling out. TheStreet.com replaced CEO Kevin English with Tom Clarke from Technometrics. The company cut costs and signed a formal deal with CNBC to share content. Most significantly, in 1999 TheSteet.com decided to go public. The IPO was underwritten by Goldman Sachs, Cramer’s old firm.
Cramer claims to have had no working knowledge of the IPO process prior to his experience with TheStreet.com.
“For those of us in the stock-buying business, the inner workings of the underwriting process had remained a total mystery. For all the years I had traded stock, underwritings had been controlled, in secret, entirely by the syndicate desk.”(Confessions of a Street Addict, 249.)
Cramer opines about the injustice of the system, especially when TheStreet.com opened for $19 and quickly spiked to over three times that price. Cramer blamed Goldman for under-pricing TSCM, and claims he advised his father and everyone he knew to sell their shares right when trading opened. He also claims Knight/Trimark manipulated the price by controlling both the buy and sell sides in order to “squeeze” the price up. (Confessions of a Street Addict, 262.)
“We had succeeded in making all the buyers lose money and all the sellers win. TSCM got one third of what people paid for the company, a colossal price screw-up. The rest got left on the table. It is a fiasco that haunts me to this day.” (Confessions of a Street Addict, 264).
As with so many of Jim’s statements, this is scarcely credible. In fact, Cramer & Co. employed a syndicate manager, Betsy, whose job it was to spot hot new offerings. When Betsy was fired, the syndicate job went briefly to Maier. Several years before TSCM went public Cramer explained the IPO process to Nicholas Maier as follows:
“IPOs are the way the brokerage houses pay back their customers,” Jim explained. “Their investment banking divisions make money underwriting he deal, we make money when it opens at a premium, and the only people fucked are the idiots who hold on longer than the initial print.” (Trading with the Enemy, page 95.)
That is to say, those average American investors whom Cramer now goes on TV nightly and tells, “I want to make you money.”
Also of note is the fact that outside of Cramer himself, the largest owner of TheStreet.com was David Rocker (whom I mentioned at the end of the Steinhardt piece). Mr. Rocker’s shares of TheStreet.com were held through two offshore funds, Helmsman and Compass, located in the British Virgin Island. A question the reader might ask at this point is, did these hedge fund managers (Cramer and Rocker) own TheStreet.com because they thought it would be a good investment? Or is there anything in our story thus far that would suggest a benefit a money manager might enjoy in not just knowing what analysts are going to say before they make it public (e.g., Steinhardt’s “Edge”), not just being able to write an occasional column for SmartMoney or being able to count on CNBC’s Maria Bartiromo to regurgitate on cue the tips she is passed (i.e., Cramer’s techniques in the 1990’s), but in becoming an actual publisher of financial news?
Anyone? Anyone?
Bueller?
JIM CRAMER THROWS SOME MISDIRECTION ABOUT ENRON
In October, 2006, I received an odd email from the manager of a large hedge fund:
“Patrick,
“James Cramer gave a speech at some forum, which he posted to his website today. He basically indicts himself one minute and twenty-five seconds into the speech by letting the world know that he received copies of the Enron partnership agreements from a Merrill banker. Agreements that he specifically states were not disclosed to the public at the time. I am no lawyer but this seems highly illegal.
“You can see it here:
“Hope all is well.”
I clicked through and there was, indeed, a poorly shot video of Jim Cramer, standing in a luncheon in New York, claiming that before Enron collapsed he had been provided confidential documents by one of Enron’s bankers about the “Special Purpose Entities” Enron was using to play its financial shenanigans, and that he (Jim) had used the information to trade ahead of the general public by shorting Enron before its collapse. Unfortunately, that video is no longer available on TheStreet.com. But I saw the video and it was exactly as described. This is one of those moments, as I predicted in a much earlier post, where you, the reader, will simply have to decide for yourself whether to believe me or not.
If what Jim says is true, then the banker providing Jim this document broke the law. I believe the question of whether the recipient of inside information who then trades on it is breaking the law is somewhat ill-defined (Martha Stewart was alleged to have done this, but was actually brought down for obstruction-of-justice: in any case, a good rule to follow is, “if one knows it is material and non-public, one should not trade on it”). What is not ill-defined is that such a person is acting unethically: in this case, he’d be selling to an unwitting public shares of a company that he knew to be a scam, thanks not to original research but to inside information provided by the scam company’s banker. However, I believe that Jim neither broke the law here nor committed the unethical act of trading on inside information, because I think the story he told in that video is a lie, a red herring cast to keep anyone from digging into the story of who really shorted Enron first, and why (a story that has yet to see the light of day, incidentally).
Wall Street has more misdirection than a David Copperfield routine.
CRAMER AFTER CRAMER BERKOWITZ
In 2000 Jim Cramer resigned from Cramer Berkowitz.
“I had broken enough furniture and monitors and keyboards to last a life-time. More than a lifetime in fact. As a forty-five-year-old hedge fund manager, I had already overstayed my actuarial table. Time to get out before the game killed me. Time to get out before I killed someone else.” (Confessions of a Street Addict, 312.)
Numerous well-regarded money managers on Wall Street have told me a different story, however. They generally say that, though Jim is loathe to disclose it, Jim’s career as a hedge fund manager was mediocre until his last two years, when he had enough of an up-tick that he was able to quit with a smile and move to TV. Whichever is the truth, Cramer’s primary affiliation is now with CNBC, where he has his own show, Mad Money (though Cramer continues to work as a part-time analyst and director for TheStreet.com).
Whatever the truth is in that regard, it is clear that Jim Cramer’s investment horizon is short. Cramer believes that the market is irrational and that “buy-and-hold” is just “brainwashing that Wall Street relies upon to keep you from taking back your assets under its management.” (Jim Cramer’s Real Money, 234). In his writings he proudly describes how he trades on short-term volatility. Given Cramer’s access to both public and institutional information channels, it is plausible that he has been tempted create the volatility upon which he trades. In recent writings, Cramer displays awareness that, as both a journalist and an investor, he is potentially conflicted.
“I know it may look to some that I am corrupt because I praise stocks I own, even though I tell you I own them. But think about the logic of it: I champion the stocks I own because I like them enough to put my money behind them. I champion the stocks I own because I think they can make me money and you money, too. By similar logic I knock stocks I don’t own because I think they are too rich and you could lose money if you buy them. I try to explain this all of the time on radio and TV. Nevertheless, people confuse my motives and believe that I am picking on bad guys and pumping stocks I own so I can make money. If only life were that simple and if only I were that powerful!” (Jim Cramer’s Real Money, 58).
Given the sheer size of Jim’s body of work it is difficult to know whether Jim Cramer uses his position as a public figure to manipulate prices. He has written thousands of articles and mentioned individual stocks many times over, at different times, as both a bull and a bear. Cramer’s opinions change so often that it is difficult to know what he believes. In fact, this inconsistency has become a rallying cry for critics. One well-known example is Jim’s shifting attitude towards Wharton Professor Jeremy Seigel, author of Stocks for the Long Run. In 2000, Seigel wrote an op-ed in the Wall Street Journal warning investors of excess valuations. Cramer responded in a piece on TheStreet.com as follows:
“I really have no use for theoreticians of the market. They make you no money. We are in a casino-like market and I want to game the casino. The absurdity of a Jeremy Siegel from Wharton coming out with some statement about valuation and how he thinks it’s wrong is just poppycock. Valuation is what it is. If you could sell only thousands of dollars worth of stock at these prices, then I would be wrong. But you can sell trillions of dollars worth. So what does it matter if an academic says the prices are wrong. They are the prices. That is the hand you are dealt, so figure it out or get lost.” Cramer Rewrites ‘How an Old Dow Learned New Tricks’,” TheStreet.com, March 18, 2000.)
Curiously, Jim Cramer wrote a piece two years later (“Checking in with Jeremy Siegel”) that struck a different note:
“Jeremy Siegel is one of the great ones. Anyone who has read Stocks for the Long Run knows that Siegel didn’t succumb to the craziness of the late 1990s. From his desk at the Wharton School, this towering financial professor penned a piece that ran the week the Nasdaq hit its high in 2000.This memorable piece said that while Siegel remained a believer in the long-term value of stocks, the prices of the Ciscos and the Nortels had just gotten too nutty and he wanted everyone to sell tech. It was one of the most stark and prescient calls I have ever seen…That’s why I paid extra close attention to Professor Siegel’s words as I shared a panel with him Sunday at Philadelphia’s Hill Towers as part of a fundraiser.” (”Checking in with Jeremy Siegel,” The Street.com, November 18, 2002.)
Cramer mentions Siegel twice in his latest book, going so far as to call him “the nation’s foremost stock historian.” (Jim Cramer’s Real Money, 211.)
As for Jim Cramer’s acumen as a stock picker, whole websites are devoted to logging Cramer’s nightly statements on Jim Cramer’s Mad Money. A few industrious journalists have tried to dig further back in time and assess portions of Cramer’s large written record. For example, in 2004, Barron’s Alan Abelson wrote a piece testing two grand predictions made by Jim Cramer for TheStreet.com. In the first, “When to Embrace the Untried Stocks,” Cramer praised WebEx (WEBX), Netflix (NFLX), Amedisys (AMED), Armor Holdings (AH), XM Satellite Radio (XMSR) and Taser International (TASR) for having the common characteristic that “they go up…they go up consistently, almost every day” (Jim Cramer, “When to Embrace the Untried Stocks,” TheStreet.com, April 2, 2004). Abelson, however, looked into each of these stocks and noted that:
“…what they have in common are valuations that, when they’re not elevated, are absurd. Judge for yourself: WebEx is selling for five times this year’s estimated sales and 35 times expected ‘04 earnings. Netflix is selling for 3.2 times projected sales and 62 times estimated earnings. Amedisys is going for 1.7 times this year’s estimated sales and 22 times earnings. Armor Holdings, 1.41 times and 19.7 times, respectively, anticipated sales and earnings. XM Satellite Radio, 21 times sales; it lacks a P/E for the good and sufficient reason it’s supposed to lose $3.27 a share this year. Last but not least, Taser International fetches 24 times sales and over 100 times estimated earnings.” Alan Abelson, “Up and Down on Wall Street,” Barron’s, April 29, 2004.)
In fact, in April of 2004 three of the six stocks Cramer lauded—NFLX, WEBX, and TASR—peaked (and two became members in good standing of the Regulation SHO Threshold List). AH and XMSR stayed flat. Only one had “gone up” over the long-term: AMED.
Abelson also examined some of Cramer’s predictions prior to the dot-com bust. He cites a speech given by Cramer in February 2000 entitled, “The Winners of the New World.”
“Here are the fabulous 10 stocks Mr. Cramer touted so grandly on Feb. 29, 2000, their price per share that day and where they are now: 724 Solutions, $1,882 a share then; around $4 a share today. Ariba, $132.25 then; $3 now. Digital Island, $116 then; acquired in September 2001 for $3.40 a share. Exodus Communications, $71.19 then; went belly-up in September 2001. InfoSpace, $1,085 a share then; $40 now. Inktomi, $137 then; acquired by Yahoo! in March 2003 for $1.65 a share. Mercury Interactive, $96 then; $45.50 today. Sonera, $55.80 then; acquired for about $6 a share in March 2003. Verisign, $253 then; $16 today. Veritas Software, $131 then; $27-plus now. (Alan Abelson, “Up and Down on Wall Street,” Barron’s, April 29, 2004.)
More recent analyses of Cramer have been less anecdotal, and more scathing. For example, “Jim Cramer Deconstructed” (CXO Advistory Group) publishes and regularly updates a comprehensive analysis of Jim Cramer’s stock-picking. As they summarize their findings:
“In summary, Jim Cramer’s stock market calls since May 2000 have low consistency and an accuracy just below average.” (Emphasis in the original.)
In fact, however, Cramer is not just “below average.” One really need look no further than Jim’s language: touting any stocks with the words, “they go up…they go up consistently, almost every day” is, to any sane investor, simple charlatanism. In the 19th century a man may have been able to stand on a sidewalk touting an elixir that cured hangovers, gout, typhus, and the Clap, and people did not know enough not to believe him. Today, anyone attempting such snake-oil entreaties would be met with general head-wagging and laughter, because consumers are scientifically literate enough to know of the several biological mechanisms underlying such maladies and understand the impossibility of any one elixir curing all of them. Similarly, someone recommending stocks because “they go up consistently, almost every day” to investors possessing a basic understanding of markets and finance will induce precisely the same head-wagging and laughter. Unfortunately, biological literacy is more widespread than is economic literacy, and Jim Cramer manages to stay on the air, pitching financial snake-oil to the general public nightly.
JIM CRAMER AND THE SHIFTING TRUTH ABOUT BEAR STEARNS
During the recent collapse of Bear Stearns Jim outdid himself in a way that combined the things that make him so unique: cock-surety coupled with deceit and historical revisionism enabled by the media which depends upon him, all outdone by Web 2.0, followed by more fake concern for the welfare of the general public over the elimination of a rule which he flouted when he himself ran a hedge fund.
First, days before its collapse, Jim told the public that Bear Stearns was just fine. Then when it collapsed he claimed he had meant the opposite of what he had said. However, his own people at TheStreet.com had recorded his opinion on the stock, and their record was precisely as the rest of the world heard it. Jim’s answer? Change the records of the Street.com. However, the maker of this video kept screenshots of the original, and his reconstruction of Jim’s perfidy is a classic.
Next, Jim went on TV and blamed the collapse of Bear on the elimination of “the up-tick rule” (in brief, since 1934 “the up-tick rule” has provided constraint on the ability of hedge funds to manipulate stocks downwards, but the rule was eliminated in the summer of 2007). In his best statesmanlike manner Jim explained the significance of the upt-ick rule, urged viewers to contact Congress, and castigated the SEC for having betrayed those honest, hardworking Americans whose savings were damaged by the SEC’s callous foolishness in eliminating the up-tick rule.
Here is the funny part about that: remember I asked you to “put a pin in” that section from Nick Maier’s book, where Jim chewed someone out for asking if he had to follow a certain rule? That was the up-tick rule:
“Jim turns toward his head trader. ‘Mark, sell ten thousand Bristol Myers.’
“‘We never bought any Bristol Myers,’ Mark replies.
“‘We own the calls,’ Jim corrects Mark impatiently, aggravated by the delay.
“So sell it short?’ Mark asks for clarification. Mark knows that according to the SEC rule book, selling stock you don’t already own (even if you do own the call options) must be marked and executed as a short sale.
“‘You are confusing me with someone who gives a shit. Just sell it! I said hit the fucking bid!’ adds Jim, not interested in wasting time over petty semantics. Skirting the ‘plus tick’ rule in this case won’t necessarily make us a lot of extra money, but in Jim’s eyes, the rule is still an unenforceable annoyance. ‘And don’t ever ask me that again!’” (Trading With the Enemy, pages 70-71).
That “plus tick” rule is precisely the “up-tick” rule whose loss Cramer now goes on TV to bemoan, explaining, quite correctly, how its elimination has turned into a wealth-transfer mechanism from hard-working Americans to hedge funds. He just never cared when he ran one. One wonders if he does now, or if he even knows.
JIM CRAMER AND THE FRIEND FROM THE FROZEN FOOD AISLE HE NEVER MET
The reader has been served enough Cramer Bad Craziness, I expect, that I may draw this story to its conclusion. To do it justice I would explain what is really happening in Jim Cramer’s head (such explanation would invoke E. R. Dodd’s shame-culture/guilt-culture distinction and Martha Nussbaum’s The Fragility of Goodness). But I will be more succinct. The way to understand Jim’s behavior is to see Jim as a deeply conflicted man (as is apparent from his TV behavior), one engaged in continuous prophylactic spinning. He spews endless self-contradictory babble because he has, in fact, lost his mind, and one must filter everything Jim says and does through the knowledge that Jim Cramer is insane. I don’t mean it in a cutesy way: he has suffered a decade-long breakdown which he gets paid for doing on air. That’s why, as I said at the outset, Cramer exists beyond good and evil: he cannot remember if he is a good guy playing a tough, or a good guy playing a tough who wants to help the public, or is a good guy playing the tough who wants to help the public but is still on the inside with the really smart-money. Somewhere in this double-triple-quadruple agent shtick he lost his mind, and he has no idea what truth is anymore. He reminds me of some lines from Talking Heads’ “Life during Wartime”:
“Transmit the message, to the receiver
hope for an answer some day
I got three passports, couple of visas
don’t even know my real name”
Jim is a condemned man distractedly waiting for the key to turn in the cell door, incoherently muttering sayings he picked up along the way, stripped of any real need to make sense of them to his listeners or himself.
Insane though he be, Jim has been the greatest common denominator of many who are integral to the Deep Capture story. In fact, it was because of this that I decided it was impossible to tell that story without telling Jim’s: most of the players, as well as most of the pawns, can be described by their relation to Jim Cramer.
The next two pieces are going to discuss two of those people, one to whom Cramer has done he can to associate himself, and one from whom Cramer has tried to disassociate himself.
Here is a college picture of Cramer and the one whom he has always done everything he could to associate himself to:
That is Jim Cramer on the left. In the middle is Eliot Spitzer. I do not know the identity of Laughing Guy on Right.
The man from whom Cramer has tried, at least once, to disassociate himself, is David Rocker. As I explained in the previous piece, Jim’s early hedge fund days were spent in the offices of Michael Steinhardt Partner. Before Karen Backfish, Steinhardt had an earlier protege, David Rocker, who worked for Steinhardt for years. Besides this Steinhardt overlap, Mr. Rocker was at one point (through two offshore hedge funds, Compass and Helmsman, both British Virgin Islands hedge funds), the largest owner (after Cramer himself) of TheStreet.com. Here is Jim Cramer on TV in 2003, introducing David Rocker. Here is Jim Cramer interviewing me on TV, asking me a question from an email that he identifies as coming from David Rocker.
Yet here are a transcript (pages 21-23) and a recording of Jim Cramer coming on an earnings call and distancing himself from Mr. Rocker, denying even that he knows Mr. Rocker other than meeting him once in a grocery store:
“Jim Cramer - - Analyst
It is true that he [Rocker] does have a position in TheStreet.com which is a company that I have a position in, too, but I just want to clarify
things. I don’t want anyone to have the impression that I have money with him, he has money with me. We don’t. And then just
so you know, I asked e-mail permission to be able to read the posting on TV. I will not just read someone’s posting without
permission and of course I welcome you on our show anytime you want to come on.
“Dr. Patrick Byrne - Overstock Com Inc - Chairman and President
And Jim, you’re welcome back here any time. You’re perfected the art of being an attack journalist. I think the next — I think I’m
going to try being an attack guest, if you want to give me a chance.
“Jim Cramer - - Analyst
I’d love too. I think you’re — this is a great quarter and you’ve done a great job, and I don’t want anyone to think that there’s –
I mean I don’t run a fund. I was a hedge fund manager for many years, Patrick, and there is a hedge fund out there called Cramer
Berkowitz.
“Dr. Patrick Byrne - Overstock Com Inc - Chairman and President
I was referring to actually Rocker’s shows up as the second largest institutional owner in TheStreet–
“Jim Cramer - - Analyst
What people wanted was if people want to take a position in TheStreet.com, I can’t stop them or start them but they certainly
don’t have any influence…. And I welcome you on the show. I don’t — you know, I mean I used to be a very scrappy guy and got into a lot of fights but I like them to be when they’re over principle, not over–I have no position with Rocker.
“Dr. Patrick Byrne - Overstock Com Inc - Chairman and President
I didn’t accuse you of that. I said I wanted to ask you that. My plan was to go on your show and ask you on the show. And I’m
glad you cleared it up.
“Jim Cramer - - Analyst
I do admit, welcome the theater of it, I welcome the excitement of it, I think that you’re building a company, there are guys who
are going to detract, I personally would not take on the detractors because it actually helps you in the end….
“Dr. Patrick Byrne - Overstock Com Inc - Chairman and President
Well, it– it was a legitimate question for me to ask.
“Jim Cramer - - Analyst
Absolutely, absolutely legitimate and that’s why I did not, you know, pick up my phone and call my lawyer and say, I don’t want
to do that. You’re a businessman. I’m a businessman. And I congratulate on what is obviously a triumph.
“Dr. Patrick Byrne - Overstock Com Inc - Chairman and President
Did you pass on, last time you had me on the show you did read what you described as an e-mail from David Rocker.
Jim Cramer - - Analyst
I may have misspoke. I mean I had no communication with Rocker other than to ask him for permission to read his posting that
was on TheStreet.com…. Well, you know, whatever he wants to do is fine but I don’t want you to give the impression that I am owned by him, he is owned by me. I’ve met him once in the supermarket. I’m kind of an independent operator as you are.
“Dr. Patrick Byrne - Overstock Com Inc - Chairman and President
Journalists can ask questions, I can ask questions.
“Jim Cramer - - Analyst
Oh, absolutely and I applaud your questioning and you critical approach to the way the press covers your company.”
Given their co-ownership of over 1/3 of TheStreet.com and their association through Steinhardt, given that Jim has had David Rocker on his show and quotes emails from David Rocker on-air as well, why would Jim Cramer try so hard to disassociate himself from Rocker like this? Cramer has said a lot of contradictory things, but why would he say of someone with such shared history, “I’ve meet him once in the supermarket”?
These are the next two players about whom I will write. As full as this piece had to be to set the stage, I can keep those pieces mercilessly short.
Posted in 1) The Players |
16 Responses
BZ
Says:
March 28th, 2008 at 7:42 am
Great information PB!
I have felt the same way about Cramer’s dichotomy of views. It always seemed strange to me that he would one day side with the Hedge Fund manipulators and the next day praise Ron Paul and call for abolishing the Fed Reserve.
Other than being crazy, the only other explanation I can come up with is that his rhetoric is meant to confuse and/or redirect the public and regulators.
rtway
Says:
March 28th, 2008 at 8:56 am
This is a story that is long overdue and done in a way that is quite easy to follow. As a person who has followed Cramer for three years or more I can relate to your statements and facts as being more than kind.This man has hurt many, many people and now his time has come to balance the scales. Bravo on a job well done and thank you.
short ostk
Says:
March 28th, 2008 at 9:12 am
PBIAPOS.
ya know
BZ
Says:
March 28th, 2008 at 9:21 am
Awww “short OSTK”
Did you get yow wittle feewings hurt?
Jim Charleston
Says:
March 28th, 2008 at 9:25 am
The shareholders of BIDZ.com are filing a lawsuit regarding stock manipulation. Would you be interested in communicating with our leader, Matthew Mills? Could we possibly join your lawsuit?
Patrick Byrne
Says:
March 28th, 2008 at 10:49 am
Jim,
Legal questions to Jonathan Johnson, please. jjohnson@overstock.com.
Patrick
KeithK
Says:
March 28th, 2008 at 12:22 pm
Dr. Bryne,
Congratulations and salutations on this fine article. I feel that you have methodically exposed yet another layer to this whole sordid affair we have come to know as Wall Street. I imagine this is going to sweep through the www like wild fire and wanted to thank you before my comments would be lost in the many that are sure to come. I can’t wait to see whats coming next
Keep up the good fight, my friend, and realize that there are a lot of people out here that are behind you 100%
Rowsdower
Says:
March 28th, 2008 at 12:56 pm
I caught Jim Cramer’s comment on Bear Stearns on the Daily Show. It was amazingly emphatic for a man who is desperately trying to back peddle now. It is fascinating to see a more in depth story on the man. Your assessment of his condition reminds me markedly of a graphic novel called The Sleeper where an agent placed in deep cover with a terrorist organization gets so lost within the assumed identity he starts to loose track of where the real him ends versus the assumed identity. Thanks for the post.
SM
Says:
March 28th, 2008 at 1:06 pm
A very wise man once told me a sound value investment is one of the most charitable gifts a man can give. When investing is about creating growth of a product or service people want, jobs are created and peoples lives improved.
The most disturbing thing about Jim Cramer’s investment philosophy is that it is a craps shoot. Like craps the only way to win consistently is to cheat. His brand of investment is at best a distraction from the business of developing the economy. At worst it is fraud and orginized crime at its grandest scale.
ES Futures Trader
Says:
March 28th, 2008 at 2:16 pm
Great article! Cramer is a loser no matter how big his bank account is. He has no moral fiber and literally steals from grandmothers to enrich himself.
CNBC - GET HIM OFF THE AIR!!! If you don’t, you are aiding and abetting his larceny.
Millerd1
Says:
March 28th, 2008 at 2:35 pm
Jim Charleston,
Please suggest Mr Mills make contact with the NIPC and NCANS agendas. The NIPC agenda, soon to be fully published, will strike at the very core mechanism by which most of the NSS has been made possible. (NIPC-National Investors Protection Coalition)
Both personal and corporate participation is welcome in NIPC. Advocation in a single company’s law suit is probably beyond the NIPC scope, it seeks to stop all NSS not just for one single company’s NSS situation. Click here to make contact: http:/www.investorprotectioncoalition.org
NIPC Secretary, Millerd1
I personally would recommend cases for stock manipulation be referred to the attorney O’Quinn, via a discussion with Wes Christian at csj-law.com
Millerd1
Says:
March 28th, 2008 at 2:53 pm
PS apparently since according to Cramer he only meet Rooker once in a produce department, it is fortunate there was a photography booth near by so Cramer’s single meeting with Rooker could be recorded and apparently:
-Spitzer happened to be shopping produce there that day at the same time,
- Reading the frivolity apparent in their faces they became very fast friends and really enjoyed that one time meeting while buying produce,
-They were very young when it happened,
- Considering their apparent age in this single meeting photograph, that produce department must be very near Harvard, since all three were attending Harvard at the same time in their lives,
-Since that time Spitzer has learned how to harvest fresh produce in a whole new dimension, and done it apparently in more than one “store” as we see alleged today.
Millerd1
rondoc
Says:
March 28th, 2008 at 3:16 pm
PB…
You are begging them to come out and play.
We all can only hope the some of the so called “smartest guys in the room” lose their cool for just long enough to do that.
What a game that would be!
Unfortunately, they know better.
Cramer seems to know the end is coming.
I would love a tape of his comments every time you write about him and he peeks.
Takuan
Says:
March 28th, 2008 at 3:40 pm
It seems two links are missing:
“Here is Jim Cramer on TV in 2003, introducing David Rocker. Here is Jim Cramer interviewing me on TV, asking me a question from an email that he identifies as coming from David Rocker.”
Is that Rocker in the picture on the right? Patrick has not written so.
As always, well written and well researched. Thanks, Patrick, and looking forward to the next pieces and eventual justice.
Like others have said, no matter how much money Cramer has, he will never be able to buy back a good reputation. The Bear Sterns back paddling is so blantantly obvious, it’s ridiculous. An honest try or another demonstration of Cramer trademark reverse psychological tactics?
orange
Says:
March 29th, 2008 at 12:14 am
it seems we come closer now to the next shoe dropping on the market… Dr. Byrne, i congratulate you on the detail of your work here and what i’ve learned in the past year of your efforts against NSS… it is now almost one year since i published my free ebook Trainwreck… most of what was forecast there has since come true, though without quite the drama i anticipated, and i have ever since been awaiting arrival of the major piece: forced unwinding of NSS positions… with an article like yours, it looks like it’s on the way, if only by ricochet… got puts?
free Trainwreck still available at whattolearn.com
mhelburn
Says:
March 29th, 2008 at 11:54 am
Perhaps the produce aisle comment was meant as an inside joke. I recall a story about the early days at Steinhardt where produce stolen from the docks was sold there or nearby. Does anyone have a reference to this story?
Considering that Steinhardt’s father was a known fence for the Mob and was connected, it makes more sense for Jim to be referring to that than to expect anyone to believe that he knew Rocker only in passing. Rocker was a general partner at Steinhardt, where Cramer’s future wife was a trader. .
Cramer might be a liar, and rewrites history per his call on BSC, but his most telling revelation was his intimate knowledge of market manipulation using options.
I once saw a psychologist discussing his experiences counseling priests. Some priests thought they were abstaining if they had sex only with men. Others considered themselves abstinate if they had sex only with others within their Order. Wall Street is rife with people who have conditional ethics. Otherwise, it is just business as usual. Push it to the limit… rules are for rubes.
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