JIM CRAMER,

Given Cramer's popularity, as well as his image as an advocate for the individual investor, the comments have prompted a wide range of response from various news outlets including the New York Times, USA Today and the New York Post.

In the interest of full disclosure, let me point out that I once wrote for TheStreet.com, co-founded by Cramer, and have previously been involved in litigation with Cramer and TheStreet.com, both as a plaintiff and a defendant. TheStreet.com is a competitor of SmartMoney.com.)

What has seemed to generate the most controversy were his remarks about attempting to manipulate stocks by aggressive buying and selling. In the interview, Cramer said:

"A lot of times when I was short at my hedge fund, and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn't take much money. Or if I were long and I would want to make things a little bit rosy, I would go in and take a bunch of stocks and make sure they are higher maybe commit $5 million in capital and I could affect it."

Later in the broadcast, he described specifically how he would go about affecting a particular stock, namely Research in Motion:

"If I wanted it to go higher, I would take and bid, take and bid, take and bid, and if I wanted it to go lower, I'd hit and offer, hit and offer, hit and offer. And I could get a stock like RIMM for maybe that might cost me $15 to $20 million to knock RIMM down but it would be fabulous, because it would beleaguer all the moron longs who are also keying on Research in Motion."

While these statements sparked significant outrage, Cramer is essentially describing aggressively bidding or offering stock in an attempt to move the market in the direction he wished it to go. And while I'm not a legal scholar, I personally find nothing wrong with what he describes here as it appears to be legitimate buying and selling. Free trade is a voluntary agreement between two parties. If Cramer was aggressively buying, then someone else was a willing seller.

In that sense, we all "manipulate" the market simply by being a part of it. And you don't need $15 million to $20 million to make a stock move. There are literally hundreds of low-float microcap stocks that anybody with a few thousands dollars and an Ameritrade account can jump.

Do you want to manipulate a stock? Go find a name with a $10 million market cap that trades fewer than a couple thousand shares a day. Put in an order to buy a few thousand dollars at the market and I'll guarantee you'll push it 5% to 10% higher. Or, perhaps even more effectively, simultaneously give both market orders as well as preplaced buy-stop orders to a few different brokers and you'll likely be able to push it even higher. From where I stand, there's nothing illegal in buying or selling a stock aggressively, even if it does move the price higher.

But nobody is bigger than the market. In trying to bully a stock up, one usually succeeds only in sinking a large chunk of money into a name at artificially high prices. After your heavy buying is done, what inevitably ends up happening is that you attempt to dump the shares and the stock quickly falls back to near or even below your purchase price. This is as true playing with $5,000 as it is with $5 million or even $500 million.

The nefarious conduct comes, in my opinion, when one crosses the line into deliberately spreading falsehoods either to reporters or the public at large in an attempt to push the market a certain way.

It's rather shocking to me that Cramer, who graduated from Harvard Law School and has regularly worked as a journalist, would suggest that planting false rumors with reporters is a commonplace and acceptable method of operating in the investment world. If a CEO lies to investors, they rightfully get prosecuted for fraud. Although I'm not a lawyer, when a money manager purposefully spreads false information, it would seem he would be equally guilty.

A decade ago, Jeffrey Vinik, then manager of the hugely popular Fidelity Magellan mutual fund, was criticized for publicly praising technology stocks, specifically Micron Technologies, even as he was dumping them. The Securities and Exchange Commission investigated whether Vinik violated securities laws by endorsing Micron while he was privately selling the shares. Fidelity eventually agreed to pay $10 million to settle a class-action lawsuit regarding the controversy.

What Cramer describes, and may or may not have participated in, is, in my opinion, far worse. Vinik was interviewed by reporters about his positions, which, in a highly volatile market environment, can understandably change rapidly. Cramer, on the other hand, seems to suggest purposefully planting falsehoods in the media in order to, in his words, "create a new truth to develop a fiction."

Previous accounts suggest Cramer engaged in this sort of questionable activity during his money-management career. In a 2002 book, "Trading With the Enemy," author Nicholas Maier, who worked at Cramer's hedge fund, wrote:

"Jim's strategy was to put in his order to buy a stock with [an employee] and then dial Maria [Bartiromo, of CNBC]. As soon as she announced the news on television, the stock would often jump. Jim then had [the employee] peel off whatever we had bought."

Maier continued, "We weren't just using the news, but making it. No sooner would Maria be thanking us for the help than we'd be getting a payback a quick hit thanks to our friend at CNBC."

What's downright astonishing is that Cramer is now employed and widely promoted by CNBC, the same network he seems to have repeatedly used over the years for seemingly unethical and potentially criminal activity. And TheStreet.com, where Cramer's "Action Alerts Plus" subscription service is sold for $399.99 a year, publishes his trading recommendation even as he describes in the online broadcast, in his words, "the way the market really works."

His insight into how money is really made? Quoting Cramer: "Hit the brokerage houses with a series of orders that can push it down, then leak it to the press, and then get it on CNBC that's also very important. And then you have a kind of a vicious cycle down. It's a pretty good game." It makes me wonder if this sort of conduct explains his much-touted record of success in the money-management business.

As a hedge-fund manager myself, I'm most dismayed by his comment that, "What's important when you're in that hedge-fund mode is to not do anything remotely truthful." What an outrageous and ugly slap in the face to the thousands of investment professionals who, apparently unlike Cramer, don't participate in such nefarious and suspect schemes to make a buck.

Any rational businessman understands that it's in his own best interest to act with the highest ethical standards. To suggest this sort of conduct is commonplace in the hedge-fund world is farce. And at a time when funds big and small are under attack from regulators suspicious of free-market capitalism, Cramer's disturbing tirade should be seen not as an expose on the hedge-fund industry but of the man himself who, bathed in the glow of the limelight, seems all too eager to share his "secrets" with the world.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.