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Is Japan in Trouble?; SAC Capital: Cramer's Best Blogs

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long WY.


The Game Looks Rigged

Posted at 12:32 p.m. EDT on Thursday, July 25

Did you ever think that when you saw a stock move that someone knew something you didn't?

Did you ever suspect that the "big boys" had the call and you were just a peon, someone to be fleeced in a game of Three-Card Stock Monte by people who had the inside skinny when you never could, people who knew what the quarter would be before it was reported, what the next takeover would be and where the next shortfall would occur?

If you read the indictment of SAC Capital that was filed today, you can draw only one conclusion: Your suspicions were absolutely right. It was rigged by the big boys, at least by this multibillion-dollar hedge fund. The implication of this indictment is that they had the call pretty much consistently, meaning that they knew what was going to happen in a broad range of stocks, stocks too numerous to mention here but they include Nvidia (NVDA), Dell (DELL), Intel (INTC), Cisco (CSCO). Cypress Semi (CY), Broadcom (BRCM), Yahoo! (YHOO), Microsoft (MSFT), Research In Motion (BBRY) and AMD (AMD).

That's right, this indictment alleges that the firm basically and routinely knew what was going to happen ahead of time and if you were buying or selling those stocks you were just an uninformed dope. They had information, according to this document, that was as good as gold and they had it every day of the week. Now the government wants back what it perceives to be the ill-gotten proceeds of that information, something that would effectively wipe out SAC capital, if the indictment itself doesn't do that as brokerage firms may be reluctant to lend SAC Capital money, its lifeblood, because they fear that they might not see it back if the firm has to close its doors. That's how it has worked on Wall Street when a big firm has been indicted in the past, namely Drexel Burnham and before that EF Hutton, storied names brought down almost instantly by charges as heavy and as frightening as these.

Now, why is the firm being indicted you might ask, and not Steve Cohen if his firm is the alleged perpetrator of these crimes? Some would say that it's happening simply because the government couldn't nail Cohen. They had nothing on him. So this is desperation, just an act that says, "OK we have indicted many people connected to this firm, but no one has flipped against the man they worked for so we have to take action anyway because we can't let Cohen get away with it."

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