Teen accused of using Internet to manipulate stocks
By Robery O'Harrow Jr. The Washington Post
NEW YORK He is a teen-age 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 Wednesday 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 Wednesday, 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 suburban 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 that
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
C. Long, the SEC's district administrator in Philadelphia, which
an-nounced Wednesday that Lebed has agreed to pay back his ill-gotten
gains. "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. Wednesday night, he said, he was going
to the horse races with friends.
"I'm feeling great today,'' Lebed said in the telephone
interview. "I have nothing to worry about.''
The SEC case is a big bump in an extraordinary early career for
Lebed, a brash but well-spoken teen-ager who at 13 immersed himself
in the business of trading by arising before dawn to check daily
market forecasts.
As an eighth-grader, he was one of three students at Memorial
Middle School in Cedar Grove, N.J., to participate in a stock
tournament then sponsored by CNBC and MCI.
His group, "Triple Threat,'' relied heavily on technology
stocks to turn a fictitious $10,000 investment into some $246,000.
That earned them a fourth-place national finish.
Since then, with the help of a friend, Lebed started his own
Internet marketing company, specializing in targeted e-mail.
An earlier venture was called Penny Wise Stock Picks.
He also routinely attends Cedar Grove government board meetings,
sometimes to speak out, because he's interested in politics.
"He's a cool guy. He's making money,'' said Jared Glugeth,
16, Lebed's friend and business partner. "He's a very big
entrepeneur.''
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