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Teen settles SEC charges
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September 20, 2000: 8:23 p.m. ET
SEC: 15-year-old defrauded investors in online stock-manipulation scheme
By Staff Writer Mark Gongloff
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NEW YORK (CNNfn) - The U.S. Securities and Exchange Commission on Wednesday settled civil charges against a 15-year-old boy for allegedly operating an Internet stock-manipulation scheme valued at more than a quarter-of-a-million dollars -- marking the first time in history that the SEC charged a minor.
Jonathan G. Lebed, 15, of Cedar Grove, N.J., agreed on Wednesday to pay $272,826 -- the amount the SEC alleges Lebed took from investors -- and $12,174 in interest. Lebed neither admitted nor denied the accuracy of the charges. The SEC required Lebed to pay the settlement in seven days.
 According to the SEC, beginning in August 1999, when Lebed was 14, he bought blocks of cheap, lightly traded stocks and then posted messages to Yahoo!Finance message boards under various pseudonyms, making false claims about the stocks he'd purchased and urging investors to buy them.
The SEC said Lebed sold these stocks after his alleged cheerleading had boosted the prices, usually within 24 hours, at profits of between $11,000 and $74,000 per transaction. The SEC said Lebed made 11 such transactions with nine different stocks.
Lebed's attorney, Kevin Marino of Newark, N.J., confirmed that Lebed had settled the case without admitting to or denying the charges. "Jonathan and his family feel this is a fair and equitable settlement," Marino said, "and they're happy to have the matter behind them."
Stock buyers beware
Ronald Long, administrator of the SEC's Philadelphia district office, said the case was a warning to investors to be more careful.
"I implore investors to be highly skeptical of any advice they receive from the Internet," he said. "People should do thorough research before making investment decisions and verify all information before acting on it."
The cease-and-desist order entered Wednesday accused Lebed of having a significant influence over stock prices. For example, according to the order, Lebed bought 18,000 shares of Man Sang Holdings Inc. (MSHI: Research, Estimates) on Jan. 5 at $1.125 a share.
The order said Lebed then posted messages to Yahoo!Finance message boards claiming Man Sang Holdings was "the most undervalued stock in history" and would be trading at $20 a share "very soon." Though the stock had a trading volume of only 100 shares on Dec. 30, 1999, more than a million shares changed hands on Jan. 6, and the price shot up to a high of $4.69, the order said. Lebed then sold his shares for a profit of $34,959, the order said.
David Horowitz, assistant district administrator of the SEC's Philadelphia office, said Lebed's alleged activities were the only reason for the sudden investor interest in Man Sang Holdings. "His messages moved the markets," Horowitz said. 
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