I'm impressed that they responded to you so quickly. As the story you quoted observes, Cramer "dissed" the SEC so badly that they have to respond somehow. Is the statute of limitations for this kind of thing different than the standard three years? If it isn't, I don't think it would be worth their putting on much of an investigation of him, since I believe he's been out of the hedge fund business for more than three years.

As for the comments in my original diary, I found the one by das monde quoting a letter from a physicist who's gotten a job at a hedge fund especially interesting. He wrote:

The most mythical of all hedge funds, Medallion, was set up 20 yrs ago by jim simons, a successful math/phys guru known for the Chern-Simons gauge theory.  This guy's been doing returns of a constant 35% since 1990 with a Sharpe of 4 (reward/risk).  He employs a little family of 60 physics PhD's in New Jersey, who devise clever algorithms to suck the stock market with systematic trades, i.e. their computer buys and sells thousands of times per minute, sometimes holding a position for just a few seconds.  Decisions are made statistically: all you need is to be right 51% of the time.

A 35% rate of return is about as good as it gets. I wonder where that money is coming from? I would guess most of it comes from small time day traders. I bet you this kind of trader has been studied, but mainly by private studies. I wonder how much turnover there is. Do these people get into trading with a certain amount of money, and then leave once they have lost it? Or do they stay in trading indefinitely, gradually siphoning off to the big boys money they earn elsewhere?

A bomb, H bomb, Minuteman / The names get more attractive / The decisions are made by NATO / The press call it British opinion -- The Three Johns