Teen Stock Broker Profits from Manipulation

C E D A R&nbsp G R O V E, N.J., Oct. 20 -- The teen-age trader who paid $285,000to settle stock manipulation charges didn’t come away empty handed:He kept about a half-million dollars in profit.

The Securities and Exchange Commission last month brought civilfraud charges against Jonathan G. Lebed, claiming he made his moneythrough a “pump and dump” scheme. Lebed, now 16, bought largeblocks of nine low-priced stocks, hyped them on Internet financialmessage boards and then — within 24 hours — sold his shares afterthe price rose. He used this method twice with two stocks.

The trades were made between Aug. 23, 1999 and Feb. 4, 2000.

Lebed’s SettlementLebed agreed to pay back $285,000 without admitting or denyingthe allegations, as a settlement of SEC charges related to 11 trades.

But, according to 60 Minutes, he actually made about$800,000 from 16 trades that the SEC did not pursue charges for.

Lebed spent some of the profits on a $42,000 Mercedes-Benz sportutility vehicle for his family, his mother said.

SEC regulators told The Wall Street Journal that they allegedwrongdoing in the cases they felt they had abundant evidence.

“We charged violations with clear instances of fraud,” SECenforcement chief Richard Walker said.

Lebed’s attorney, Kevin Marino, said the SEC had wanted torecover his client’s total earnings, but they settled on a “somewhat arbitrary” figure.

No RemorseIn an interview with 60 Minutes, Lebed said he sees nothingwrong with what he did.

“I wasn’t posting any kind of false information. I didn’t make up any facts or do anything like that,” Lebed said on the show, which will air on Sunday.

SEC Chairman Arthur Levitt said Lebed made more than 200postings on individual securities. “And that represents, in myview, a wholesale effort at deceiving many investors,” Levittsaid.

Marino said most of the Internet postings included a disclaimer,“Be sure to take the time to do your research.”