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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (227837)	11/12/2007 5:50:02 PM
From: ig	Respond to of 793670

This article on Lebed was a real eye-opener for me: cs.brown.edu A few excerpts: At length, I phoned the Philadelphia office of the S.E.C., where I reached one of the investigators who had brought Jonathan Lebed to book. [...] "Tell me about the kid." "He's a little jerk." "How so?" "He is exactly what you or I hope our kids never turn out to be." "Have you met him?" "No. I don't need to." [...] I waited a couple of months for things to cool off before heading down to Washington to see Arthur Levitt. [...] "You think it's a moral issue." "I do." "You think Jonathan Lebed is a bad kid?" "Yes, I do." "Can you explain to me what he did?" "He'd go into these chat rooms and use 20 fictitious names and post messages. . . . " "By fictitious names, do you mean e-mail addresses?" "I don't know the details." Don't know the details? He'd been all over the airwaves decrying the behavior of Jonathan Lebed. "Richard -- call Richard!" Levitt was shouting out the door of his vast office. "Tell Richard to come in here!" Richard was Richard Walker, the S.E.C.'s director of enforcement. He entered with a smile, but mislaid it before he even sat down. His mind went from a standing start to deeply distressed inside of 10 seconds. "This kid was making predictions about the prices of stocks," he said testily. "He had no basis for making these predictions." Before I could tell him that sounds a lot like what happens every day on Wall Street, he said, "And don't tell me that's standard practice on Wall Street," so I didn't. But it is. It is still O.K. for the analysts to lowball their estimates of corporate earnings and plug the stocks of the companies they take public so that they remain in the good graces of those companies. The S.E.C. would protest that the analysts don't actually own the stocks they plug, but that is a distinction without a difference: they profit mightily and directly from its rise. "Jonathan Lebed was seeking to manipulate the market. The kid himself said he set out to manipulate the market," Walker virtually shrieked. But, of course, that is not all the kid said. The kid said everybody in the market was out to manipulate the market. "Then why did you let him keep 500 grand of his profits?" I asked. "We determined that those profits were different from the profits he made on the 11 trades we defined as illegal," he said. ================= Suddenly, everything became very clear to me.