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Cramer on SEC: The Lifeguard Is Off Duty

Friday, 27 Aug 2010 | 8:17 PM ET

The final lesson in Cramer’s Stock Market Survival School is this:

Protecting Your Portfolio
Cramer coaches you on how to take control of the markets.

“The lifeguard is off duty,” he said. “And when you go swimming in this market, you had better remember there’s nobody out there making sure the water is safe.”

Cramer means, of course, the Securities and Exchange Commission, which he thinks does little these days to protect retail investors. Since the most recent Bush administration took over, the SEC has repealed the uptick rule, approved double- and triple-levered exchange-traded funds and allowed high-frequency trading, all of which have made it harder for “the little guy” to buy and sell stocks. And President Obama has done little to roll back the damage, Cramer said.

Don’t expect any help from the exchanges either, whether Nasdaq or NYSE Euronext . It’s in their interest to allow hedge funds to make tons of fast trades because that’s how the exchanges make their money. There was a time when the Naz and NYSE were nonprofit, mutualized organizations that could police themselves, but those days are gone. Now their goal is making money, which is fine, but retail investors need to keep this in mind.

And one other note: Investors are also on their own in defending themselves against the Bernie Madoffs of the world. He did, after all, slip right through the SEC’s fingers. So if you’re going to give your hard-earned cash to a money manager, then make sure to demand reports directly from where the manager keeps his master account. And be sure to deal directly with the money manager’s accountant to get results. Also, never give money to a manager who puts it to work in an asset without an easily accessibly price.

If you can’t find the price of said security on CNBC.com, Cramer said, take back your money.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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