SEC Settles Case Against Teen Accused of Internet Fraud
Sept. 21 -- He was a teen reportedly obsessed by Wall Street, waking up early to make dozens of trades before heading to high school. And according to federal agents, that obsession led him to a quarter-million-dollar take in an illegal Internet stock fraud scheme.
The Securities Exchange Commission said Wednesday it has settled its case against northern New Jersey 15-year-old Jonathan Lebed, who the agency said had bought large blocks of cheap penny stocks, then hyped them on financial message boards using phony names. As prices rose he would dump the stock — within 24 hours — and collect his profits.
In some instances, Lebed placed a sell limit order before the market closed on the day he purchased the stock to ensure that he would not miss the price spike while he was in school the next day.
An ‘Extraordinary, Intelligent Person’
Lebed’ lawyer, Kevin H. Marino, interviewed on ABC’s Good Morning America, described him as an “extraordinary, intelligent person” who has done “phenomenally well as an investor.”
Added Marino: “He certainly agreed he will not engage in improper activity. But I think you can expect to see Jonathan Lebed in lots of entrepreneurial activities.”
As part of the settlement, Lebed has agreed to return the money he made, including interest, which totals $285,000, according to the SEC. The agency had brought civil fraud charges against Lebed for 11 alleged manipulations, involving nine stocks, which took place from Aug. 23, 1999, to Feb. 4, 2000.
Lebed neither admitted nor denied the commission’s findings, but agreed to refrain from similar behavior. SEC officials said it is the first time the agency has brought charges against a minor.
SEC: Internet Stock Tips Risky
Regulators said the case demonstrates the risks of Internet stock tips. Ron Long, administrator of the SEC’s Philadelphia office, which handled the case, told Good Morning America that investors have to be careful.