(COMTEX) B: Teen Trader To Return Illegal Gains
B: Teen Trader To Return Illegal Gains
NEWARK, N.J., Sep 20, 2000 (AP Online via COMTEX) -- A New Jersey teen has
agreed to repay $285,000 that stock regulators said he made through illegal
trading on the Internet.
The Securities and Exchange Commission said Wednesday that Jonathan G. Lebed
bought large blocks of penny stocks, hyped them on financial message boards and
then dumped his shares after the price rose.
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.
The 11 alleged manipulations, involving nine stocks, took place from Aug. 23,
1999, to Feb. 4, 2000. Lebed was 14 at the time.
SEC officials said it is the first time the agency has brought charges against a
minor.
Lebed, now 15, of Cedar Grove, neither admitted nor denied the commission's
findings, but agreed to refrain from similar behavior.
His lawyer, Kevin H. Marino, described him as an intelligent, well-rounded
youngster "who has been very interested in the securities industry for some time
and has been an avid investor."
"He and his family feel it's a very fair and appropriate settlement and are
happy to have the entire matter behind him," Marino said.
He declined to make the boy available for an interview. The family has an
unlisted phone number.
Regulators said the case demonstrates the risks of Internet stock tips.
"I implore investors to be highly skeptical 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," said Ronald C. Long,
administrator of the SEC's Philadelphia office, which handled the case.
His associate director, Joy Thompson, said the agency could not comment on how
it learned of Lebed's trading.
Marino said the case began after the SEC identified trades "it felt were
problematic."
Lebed traded in custodial accounts at two brokers that were in his father's
name, the SEC said.
The stocks were in a variety of sectors, including entertainment and the toy
industry, Thompson said.
"They were very thinly traded, low-price stocks. They are very volatile because
they are very thinly traded," Thompson said.
The stocks involved, traded over the counter or on the Nasdaq Stock Market,
were: Manchester Equipment Co. Inc., Just Toys Inc., Yes Entertainment Inc.,
Fotoball USA Inc., Man Sang Holdings Inc., West Coast Entertainment Inc., Havana
Republic Inc., Classica Group Inc., and Firetector Inc., according to SEC
documents.
"We've not alleged any harm against these companies. But anyone who was in the
market and paying attention to these messages was hurt if they bought in too
late or sold too late," Thompson said.
No aggrieved investors have contacted the SEC, and no decision has been made on
whether they should be compensated, Thompson said.
The SEC found that after Lebed bought a stock he sent hundreds of identical,
false e-mail messages, each under a fictitious name, touting the stock he had
just purchased.
One 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 percent" and was "the most undervalued stock ever."
His profits on each trade ranged from more than $11,000 to nearly $74,000,
ultimately totaling $272,826. The $285,000 settlement reflects prejudgment
interest of $12,174.
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On the Net:
SEC news release: sec.gov
By JEFFREY GOLD
Associated Press Writer
Copyright 2000 Associated Press, All rights reserved
-0-
APO Priority=r
APO Category=1310
KEYWORD: NEWARK, N.J.
SUBJECT CODE: 1310
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