This shouldn’t be happening on CNBC

Posted By on June 21, 2007

Ratigan and AdamiI often tune into the CNBC financial programs, particularly the opening and closing bell hours to monitor the daily happenings in the financial markets. Occasionally the host allows and encourages a guest the freedom to mention stocks … a policy that I find questionable especially when its a smaller company during trading hours. (I hope the SEC is keeping an eye on this policy) If a GE or a Boeing is mentioned positively or negatively its no big deal, but when they comment on something like Cumulus Media (CLMS) it is something different … a mere mention caused the stocks average daily volume to go up over 100%!

Cumulus Media 1 yr TV Chart at 3:48PMTo illustrate my point, Dylan Ratigan encouraged Guy Adami (Fast Money) to mention Cumulus Media positively during trading hours; Adami suggested that it stands to gain as the advertising spending from political campaigns accelerates, especially if NYC Mayor Bloomberg enters the race as a 3 party candidate (link). As expected, traders jump on the mentioned stock and it quickly traded up just 10 minutes before the closing bell. This begs the question, did Ratigan and Adami have a vested interest (friends, clients, etc) in highlighting this particular stock during trading hours? I doubt it, but this practice needs to stop since CNBC, Ratigan and Adami knew exactly what is going to happen.

I’m including the CNBC TV chart above that were prepped (known in advance) for the closing bell segment yesterday (Wednesday, June 20, 2007). Below is an actual response chart showing the price jump when CLMS was mentioned at 3:48 PM — also note the spike in volume. Thankfully I was not trading this company short, but if someone was, they lost a few dollars trying to close out their daily position.
CMLS on June 20, 2007

Comments

  • jd beyer

    This kind of garbage is what the average investor pays for. I can’t believe they can be so open and do this on TV? You are right, its something that the SEC needs to fine the individuals from doing. Great post.

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.