Newspaper article The Florida Times Union
Teen Accused of Internet Stock Manipulation SEC Claims Phony Postings
NEW YORK -- He is a teenage computer whiz obsessed by Wall Street, a stock maven so precocious that as an eighth-grader he nearly won a national trading tournament for students.
But yesterday federal regulators said 15-year-old Jonathan Lebed had become too crafty for his own good, accusing him of using the Internet to manipulate stocks and earn nearly $273,000 in illegal profits. It was the first time the agency has charged a minor.
In a settlement announced yesterday, Lebed agreed to pay the government $285,000, which includes interest on his profits. He neither denied nor admitted wrongdoing, but agreed to refrain from such behavior.
Working up to six hours a day on a computer in his New Jersey bedroom, Lebed sent out hundreds of phony postings on the Internet, extolling stocks he bought through a brokerage account his parents set up for him when he was 12, according to the Securities and Exchange Commission.
Because he used aliases, the SEC said, there was no way other Internet surfers in search of a promising tip could know they were being manipulated by his exciting pronouncements. And because he used "sell limit orders," which automatically sold the stock when it reached a certain level, he often was in school when he made his biggest profits, the SEC said.
"At about 14, he crossed into the dark side," said Ronald Long, the SEC's district administrator in Philadelphia. "While he was sitting in math or science, he knew he was making his profits."
Lebed, a high school junior, and his mother declined to discuss details of the case. But after agreeing to be interviewed, he professed to be unconcerned about the federal action. He continues to attend school and develop on his own online promotions company, eprolutions.com. Last night, he said, he was going to the horse races with friends.
"I'm feeling great today," Lebed said. "I have nothing to worry about."
The SEC case is a big bump in an early career for Lebed, a brash but well-spoken teenager who at 13 immersed himself in the business of trading by arising before dawn to check daily market forecasts. …