Armed with these sky-high -- and allegedly totally phony -- falsely verified valuations, the traders were able to "prove" to their bosses that they made millions for the firm, when the profits were totally illusory.They were "caught on tape" making up prices out of whole cloth, so to speak, and it makes fascinating reading, a tale akin to a shady firm that kept two sets of books -- the real one, which showed hideous losses, and the phony one, the one they showed to the bosses, that showed bountiful gains.My blood wanted to boil when I read these indictments, particularly because the whole mortgage market was falling apart when these alleged crooks tried to say their mortgage bonds were holding up terrifically. And we wonder how this whole horrible crisis refused to be quelled.Is it all fixed? Not if you stay with clean companies that pay good dividends or offer the best products and sport crystal-clear balance sheets.But the rest? Let's just say, approach it with that age-old Latin mantra, caveat emptor.At the time of publication, Cramer was long AAPL and KMP. >To order reprints of this article, click here: Reprints
Wednesday, March 27, 2013
Cramer: Let the Investor Beware
Is the market fixed? Is it a total mug's game? One that is rigged against you?I don't think so. You can buy plenty of terrific companies doing fabulous things, whether it be Apple(AAPL) with its amazing products or Kinder Morgan Energy(KMP) with its bountiful dividends, or Chipotle Mexican Grill(CMG) with its dazzling growth. They aren't mug's games.They aren't rigged.But on some occasions, parts of the market seem very shady to the detriment of home-gamers everywhere, and I understand the revulsion that so many feel about Wall Street.This morning, I talked with the "Squawk on the Street" gang about this outrageous Caesar's initial public offering, one where apparently only a small sliver of stock will be offered, with plenty left behind it. Do you think the public will understand that the little stock morsel that's offered is just the beginning of a flood of equity coming their way?After trying to go public and failing not that long ago, this new Caesar's deal seems outrageous to me, almost a blue-light special drawing you into the store with what looks like a terrific piece of merchandise, when in reality, this is an equity stub of a much larger offering that can be dribbled out over time. The Securities and Exchange Commission has got to come to grips with these ever-shrinking sliver offerings that trick the public into thinking that the merchandise is pristine, courtesy an attempt to engineer a pop to the IPO, and gets them excited, simply because they don't understand that there's a ton of stock that will be offered right behind it.And if you want outrageous, check out the incredible indictment of three Credit Suisse(CS) traders by the Southern District of New York, alleging fraudulent valuation of bonds, inflating prices, in order to obtain gigantic bonuses that 99.9% of Americans only dream of. The government caught this trio allegedly creating phony valuations to boost their pay, including a $7 million bonus for one lucky guy, simply by claiming that the mortgage bonds they owned were worth far more than the market said they were worth.