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The Real History of Jim Cramer, Founder and Mad Money Host

Dec. 21, 2012
Investing, Investing Strategy
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by Susan Lyon

Earlier this week, the leading financial site was charged with accounting fraud by the SEC.  The SEC release points to multiple charges of accounting fraud against TheStreet and 3 executives, pointing to “accounting irregularities” that occurred throughout 2008 and 2009.

While the current CEO of TheStreet Elisabeth DeMarse has cooperated with the SEC to get past the fraud and restate earnings, TheStreet was begun by a man with a less than clean history.  It was co-founded in 1996 by Martin Peretz and Jim Cramer – a man with a controversial track record.

History of

Jim Cramer, the popular TV personality of CNBC’s Mad Money, remains Director of TheStreet, Inc. Board of Directors today.  While Cramer is not implicated in the SEC’s current set of charges, Cramer himself has a long history of fraudulent activity – yet he remains a highly popular talking head with a love-hate reputation.

What history lies behind Cramer’s credentials and expertise?  This reference lays out the facts and timeline behind Jim Cramer’s professional and personal history, as well as the key controversies he’s left in his wake.

Jim Cramer’s Personal History: A Timeline

Though professional looking on paper, Cramer’s past is a mixed bag.  The official-meets-unofficial timeline is as follows:

  • 1977: Graduated with a B.A. from Harvard amidst scandal – despite being magna cum laude, he was denied his diploma on stage for a revealing article he’d written as Editor-in-Chief of the Crimson.  He then began a career in journalism.
  • 1978: Cramer was one of the first on location to cover the Ted Bundy killings and received notoriety for his reporting, but he soon found himself in a low place: repeatedly burglarized, broke, with jaundiced liver, and sleeping in his car.
  • 1981-1984: Switched career paths and obtain a J.D. from Harvard Law School, accepting a job briefly with a law firm upon graduation but quickly became a stockbroker with Goldman Sachs.
  • 1987: Left Goldman to run his own hedge fund, Cramer & Co (later Cramer Berkowitz), which he ran until 2000.  His CNBC biography reports a “compounded rate of return was 24 percent after all fees” throughout his time there.
  • 1996: Co-founded with publisher and former Harvard professor Martin Peretz, which he operated while also managing the fund.
  • 2001: Became a full time media figure, author, and TV personality.
  • 2005: Mad Money first aired on CNBC.  Cramer is now the host of Mad Money and also the co-anchor of Squawk on the Street.
  • 2006: A Cramer interview on TheStreet’s “Wall Street Confidential,” excerpted below, raised significant questions over the legality of Cramer’s stock manipulation practices.  The SEC investigated and subpoenaed TheStreet and Cramer, but later backed away.
  • 2008: Cramer earns notoriety for advising investors not to move their money from Bear Stearns on March 11, 2008; the company goes under days later.

The Jim Cramer Confessions: How He Manipulates Markets and Media

Meanwhile, Jim Cramer has a known history of market manipulation and potential fraud.  In this public YouTube clip, Jim Cramer explains very honestly how he approaches manipulating the stock market to profit:

“I would create a level of activity beforehand that could drive the futures; it doesn’t take much money.  Similarly, or if I were long and I wanted to make things a bit rosy, I would go in and take a bunch of stocks and make sure that they are higher and maybe commit $5 million in capital and do it and I could affect it.”

Cramer concludes that, “by the way, no one else in the world would ever admit that.  I’m not going to say it on TV.”  He then goes on to explain what a good rumor-spreading media strategy around how to keep Apple stock down would look like:

“Apple’s very important to spread the rumor that both Verizon and AT&T have decided they don’t like the phone… it’s a very easy one to do because it’s also you want to spread the rumor that it’s not going to be ready for MacWorld.  And this is very easy because the people who write about Apple want that story, and you can claim that it’s credible because you spoke to someone at Apple because Apple [isn’t going to comment]… The way you do that is you pick up the phone and you call 6 trading desks and say listen, I just got off the phone with my contact at Verizon.”

Furthermore, in an earlier 2006 video that has since been removed by TheStreet, Cramer is reported to further admit to manipulating markets.  Because of his public position and the power that comes from it, Cramer is capable of actually manipulating the market – and he’s not above lying to trading desks and media professionals alike, in order to influence the financial markets.

Looking beyond both his popularity and controversy, looking back over his past recommendations it’s clear Cramer has given both good advice and bad advice over the years – we’ll let you be the judge of his merit.