Accounting irregularities equal sell. It’s that simple, Cramer said. Don’t think – just sell. It’s not just that lying about numbers is illegal, it’s that companies that have to lie can’t make their numbers. Sometimes this isn't the case, but more often than not it is.
And, no, options backdating is not an accounting problem, Cramer said. It’s a compensation problem. But companies that backdate options for their officers don’t do it because business is bad, they do it because business is good. Those executives would rather take stock than cash. If anything, options backdating can be a reason to buy a stock, not sell one, he said.