CNBC Suspends Analyst Over Complaint
CNBC-TV temporarily yanked a well-known guest analyst from the network Wednesday after ethics questions arose about whether he was commenting on a stock and attempting to trade it at the same time.
Wall Street money manager James Cramer, who also frequently appears in print and on the Internet, was removed from CNBC while the business network investigates comments he made about the stock of Internet company WavePhore Inc.
Cramer denied any wrongdoing.
WavePhore, a developer of online broadcasting technology, complained that Cramer said on the Dec. 2 episode of “Squawk Box” that he had tried to “short” the company’s stock--an investment strategy that is a bet the price will tumble.
In a short sale, an investor borrows shares, typically from a broker, and sells them immediately in the market. The goal is to repay the loan later with cheaper shares--assuming the price in fact declines.
On Dec. 1, WavePhore stock soared 72% to $15.25 after the company announced plans to develop an Internet shopping mall. The next day on CNBC, Cramer suggested the surge in WavePhore’s stock was based on speculation and might not last.
On Wednesday, he angrily denied that he was trying to short-sell the stock and said he did not mean to give that impression on the program. He said he had simply asked investment firm Goldman, Sachs & Co. if any WavePhore stock was available to borrow, because he was investigating whether other investors were short-selling it.
WavePhore’s stock has fallen since the show; it closed Wednesday at $8.06 on Nasdaq.
WavePhore has asked Nasdaq and the Securities and Exchange Commission to investigate the trading prior to Cramer’s remarks. Spokesmen for both agencies declined to comment on whether the agencies were doing so.
