Hot Stock Tips
This is a cautionary tale. You remember gtting emails with hot penny stock tips, right? Looks like this entrprising young man was a pioneer. He was one of the first to start using the internets for the ancient scam:
Jonathan Lebed (born September 29, 1984) is an American notorious for using internet technology to hype stocks.
Between September 1999 and February 2000 Lebed made hundreds of thousands of dollars by posting in internet chat rooms and on message boards encouraging people to buy penny stocks he already owned, thus, according to the SEC, artificially raising the price of the stock. The SEC under Arthur Levitt prosecuted him. In 2001 Lebed and the SEC negotiated an out-of-court settlement in which Lebed forfeited $285,000 in profit and interest he had made on 11 trades without admitting any wrongdoing — allowing him to keep close to half a million dollars.
The case was controversial — the SEC had never prosecuted a minor — and produced significant media interest. Lebed contended that his activity forecasting stock prices was no different from and no more illegal than what professional Wall Street analysts do every day, only he utilized the internet. Despite the negative press and SEC inquiry, Lebed continues to trade actively and sends out a free email newsletter on a daily basis in which he gives stock picks. The end of the newsletter often contains a disclaimer like the one below.
If you’re dumb enough to buy stocks on a tip like that, you deserve to lose your money. I’m not mean, I’ve been there – in the dumb, and sometimes desperate, place. I’ve never bought stocks hyped by email but I’ve held onto penny stocks way too long because of enthusiastic stock forum posts. People have hidden agendas, always a good thing to remember.