Nasdaq's Blunder Could Be NYSE's Boon

Today's the day that John Reed can make himself a hero of the NYSE. Or he simply can sit back and ignore what happened in Corinthian Colleges (COCO - commentary - Cramer's Take) on Friday.

I'm betting he ignores it because, frankly, Reed's not a trader, and like all nontraders, he wouldn't have a clue about why people are mad as heck at the Nasdaq and its many derivatives.

On Friday, the Nasdaq halted trading in Corinthian after a big break in the stock and then cancelled all trades done in Corinthian between 10:46 a.m. EST and 10:58 a.m. EST.

In other words, you got a do-over if you sold one million Corinthian into the morass, or, more importantly, if you were the house that triggered the big decline with what turned out to be a keypunch error.

For those who think that mistakes are mistakes and you have to pay for them, this little exercise in trade-breaking makes you think twice. If I had a nickel for every time I had a trade break caused by a malfunction or a keypunch, I would be able to own the Philadelphia Eagles right now instead of just watching them.

But this isn't the NFL. This is the Nazz, where they break trades for big guys, but not small guys, especially when millions might be lost.

It is worse. The Nasdaq machines were in a state of pure chaos Friday. The organization, whoever that really is, first issued a statement saying that Corinthian was halted for news. That was totally and completely wrong. There was no news.

Then it said that the stock was halted for "extraordinary market activity." Huh? That's a reason to halt? You play on when that happens. You play through. But the machines and the people who run them had no order going on. In fact, the Nasdaq, rather than being repentant, immediately decided to launch a misdirection play, calling the media and blaming the problems on Archipelago. On Friday I got a call from some nameless gnome at Nasdaq attempting to put the focus on Archipelago, but when I reminded her that had I traded for 20 years and that the real issue was that the Nazz broke trades because it lost control of the situation and some big guy hollered for help, my Deep Throat went hush on me.

---

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS by clicking here. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."