Jim Cramer draws fire

By Dane Hamilton

NEW YORK, March 20 (Reuters) - Stock market commentator and CNBC television host Jim Cramer has raised eyebrows after describing illegal activities used by hedge fund managers to manipulate stock prices.

In a December video interview on TheStreet.com (TSCM.O) Web site, a financial news company he co-founded, Cramer described how he could push stocks higher or lower, depending on if he was long or short, at his previous job running a hedge fund.

The interview, which has only now got widespread attention after being posted to online video site YouTube, may be studied by U.S. government and stock market regulators, hedge fund experts and legal sources said.

The interview, which can be seen at

(here), described methods including tactical buying, shorting or using options to create an impression in the market that could prompt other traders and investors to buy or sell a stock.

"A lot of times when I was short at my hedge fund ... meaning I needed (a stock) down, I would create a level of activity beforehand that could drive the futures," said Cramer. "It's a fun game and it's a lucrative game."

Cramer, host of the popular CNBC television show Mad Money, described tactics that could be used to drive down technology stocks such as Research in Motion (RIM.TO) or Apple Computer (AAPL.O) to make them cheaper to purchase later. CNBC is owned by General Electric Co. (GE.N)

In the interview, Cramer said a hedge fund manager's favorite tactic is to get a rumor about a stock to an unwitting reporter -- at the Wall Street Journal or at his current employer, CNBC -- and hope that it moves the stock in the direction the manager wants.

Cramer said some tactics are "blatantly illegal," but sometimes essential for poorly performing hedge funds. He did not say he ever used such tactics himself.

Cramer said if a market participant wanted to get shares of a company like RIM lower then he should first get investors "talking about it as if there is something wrong with RIM".

"Then you call the (Wall Street) Journal and get the bozo reporter in Research in Motion and you would feed that (rival) Palm's (PALM.O) got a killer it's going to give away," he said. "These are all the things that you must do on a day like today and if you're not doing it, maybe you shouldn't be in the game."

"It might cost me $15 million or $20 million to knock RIM down but it would be fabulous because it would beleaguer all the moron longs who are also keying on Research in Motion," said Cramer.

He also said the SEC does not understand some illegal activity.

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