The US Securities and Exchange Commission this week settled
civil fraud charges against Jonathan G. Lebed from New Jersey, aged
15, for using the internet to conduct a stock manipulation scheme
that made profits exceeding $270,000.
Without admitting or denying the findings, the boy settled with
the Commission, agreeing to discontinue his on-line trading
activities and to repay the illegal profits and interest. The case
is the first time the SEC has brought charges against a minor.
The practice began when Lebed was just 14. Using brokerage
accounts, he purchased a large block of shares and within hours he
sent numerous false and/or misleading unsolicited e-mail messages,
or spam, primarily to various Yahoo! Finance message boards touting
the stock he had just purchased. Using false names, he claimed that
a company trading at $2 per share would be trading at more than $20
per share "very soon." Other postings claimed that a stock would be
the "next stock to gain 1,000%," and was "the most undervalued
stock ever."
Lebed sold all of the shares, usually within 24 hours, profiting
from the increase in price his messages had caused. 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 increase of the stock while he was in school the next
day.
Ronald Long of the SEC said, "I implore investors to be highly
sceptical of any advice they receive from the internet. People
should do thorough research before making investment decisions and
verify all information before acting on it."
