Cramer Quick Take: Snapchat for Insider Trading

Jim Cramer questions whether Snapchat can be used for insider trading.
By Bret Kenwell ,

NEW YORK (TheStreet) -- Have insider traders found a way to communicate in an untraceable manner? TheStreet's Jim Cramer and Debra Borchardt talked about the new technology.

Snapchat is generally a technology used for inappropriate behavior, such as "sexting" involving the transmission of racy pictures and messages, Borchardt pointed out. "Snapchatting" is when someone sends an image or a text that only last for 10 seconds or less before disappearing.

Cramer said he talked to Preet Bharara, the U.S. Attorney for the Southern District of New York, who left him with the impression that the federal prosecutor didn't have any way of finding the archives of Snapchat conversations.

Once upon a time, insiders used email to communicate possible upcoming deals or big events. But prosecutors were able to subpoena email records and use them as proof of insider trading.

Before that, telephone calls were used but here, too, records could be sought on who and when conversations were taking place. Even instant messaging can be pulled off computer drives to prove insider trading has taken place, Cramer noted.

But if Snapchat proves to be untraceable, then insider trading could have a real bonanza, Cramer said.

He sid he'd like to think the government has a way of pulling up the data in these messages or the bad guys "are really getting away with one" here.

Borchardt joked that perhaps fugitive Edward Snowden could tell us whether the National Security Agency has cracked the Snapchat code.

-- Written by Bret Kenwell in Petoskey, Mich.

Follow @BretKenwell

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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