Mad Money is split into segments. He talks at length about a single stock or two that he has researched. Then he may interview an executive of a company he likes (that’s why Farrell was there). Then, controversially, he rattles off recommendations in the “lightning round,” in which callers ask about a specific stock. Sometimes, he hits a button and two cartoon bulls (or bears) cross the screen accompanied by a “moo” over the sound system (or a “rrroawer”). His “buy” calls often send stocks spinning up in price the next day—the phenomenon has a name, the “Cramer bump”—only to settle back. The night I was there, Cramer said he liked Arch Coal Inc., (“ACI is good”), Ford’s preferred shares, and to a lesser degree, engineering firm Foster-Wheeler Corp., but didn’t like Intel right now. (And yes, it was hard to keep track; picks can be found on CNBC’s Web site.)
Cramer kids a lot but he is not kidding, I believe, when he says he is fighting for small investors. Many viewers seem to appreciate it and like him. The crew likes him. I like him, despite my firm belief that trying to beat the market at home is a fool’s game. That’s just me. If people want to try, they should go make a million dollars.
Alpert, fifty one years old, is a Barron’s senior editor widely respected among his peers for his deeply researched work and willingness to take on the stickiest subjects. He has successfully weathered libel suits from angry and powerful subjects, including one who took his case all the way to the Australian Supreme Court. (Alpert’s piece held up, and the case settled for a nominal amount.) The Audit praised him in December for a solid piece that sharply, and justly, criticized a combative and unprofitable tech company, ParkerVision.
Over the summer, Alpert came across a study by Northwestern University business school students noting, among other things, that some of Cramer’s picks had moved up before Cramer mentioned them on the air. The early stock movements by themselves proved nothing, but raised questions—potentially explosive ones—about whether Cramer and CNBC were allowing information to leak before the show, or, worse, whether someone was using the show to profit illegally, a practice known as “front-running.”
Alpert’s investigation was relatively brief, as these things go, but no less bitter for that. It began on August 1, a Wednesday, when Alpert called Cramer at TheStreet.com, the financial-news publication that Cramer co-founded.
Accounts vary as to what Alpert’s initial request was about. Alpert says he called asking simply for data, a list of Cramer’s stock picks suitable for analysis. He describes his demeanor in a way that recalls Marcus Welby, serious but non-threatening, just wanting to check the facts. CNBC describes Alpert as a kind of Elliot Ness on a steroidal rage, saying he had a story that centered on the leak angle and demanded a response, more or less immediately.
Early confusion led to a frantic series of phone calls on Friday, August 3, in which Cramer and CNBC officials called Alpert, lawyers at Dow Jones & Co., Barron’s publisher, even Dow Jones’s then chief executive, Rich Zannino, trying to head off what they characterized as a potentially libelous story that would cripple if not destroy Mad Money and ruin Cramer’s reputation.
“I needed that juggernaut to stop,” Cramer, still visibly upset, recalled.
Alpert was vague about the publication date of the story, which is standard practice for financial publications, but probably added to the confusion at CNBC. Barron’s is dated Mondays, but is printed early Saturday morning, so CNBC had some basis to fear the story was running that night.
Alpert’s leak questions triggered a full-on red alert at CNBC, which set to work to find alternative explanations for the stock movements in question, and hired outside counsel from Paul, Weiss, Rifkind, Wharton & Garrison, which ran up bills exceeding $100,000. Before it was all over, CNBC officials had zinged 570 e-mails to each other about the Barron’s probe. For our purposes, who said what when, and how it was said, during the early stages, don’t matter since the leak discussion came to nothing and were properly dropped.
But for CNBC officials, it does matter, and they’re still sore about their integrity being called into question and being forced to scramble—and devote hundreds of hours—to prove a negative. Adding to their stress was the fact that the Barron’s query came as the network’s general counsel, Lauren Donovan, who had a central role in the discussions, was in the final stages of a battle with cancer, to which she would succumb in December. (Alpert, for his part, was undergoing treatment for prostate cancer, for which he would later have surgery. Neither side knew about the other’s health issues.)