Between September 1999 and February 2000, when Jonathan Lebed was 15 years old, he used the internet to promote stocks by creating numerous accounts and posting hundreds of recommendations on different forums to encourage people to buy the stocks he had already owned. And as a result, on the next day, the trading volume of those stocks surged and their prices jumped, but subsequently, their prices fell since the fundamentals of the companies couldn’t support their prices. In this period, Jonathan made hundreds of thousands of dollars and became the first and only minor in history to be prosecuted by the SEC. Many regards what Jonathan did as unethical. Not only did Jonathan post fallacious statements regarding the growth prospects of the companies he was recommending, but also he profited from his trades at the expense of the investors who made decisions based on his recommendations.
Currently, Jonathan was working at Lebed.biz, a company founded by himself. He sent out a newsletter on a daily basis recommending a stock. The newsletter typically looks like this:
On the company’s website, it documents the successes of its past recommendations but leaves out the failures, creating an illusion that Lebed’s predictions are accurate and reliable. His marketing tactics are therefore deceptive and target especially the gullible investors.
Here’s an interview with Jonathan Lebed:
Thanks for writing an ethics post, Bill.
I’m enjoying your selection of topics for your blog, especially with a finance angle to some of them. Good use of images and embedded links to add interest to your posts. You’ve shared your personal opinion in some, and it would be great to see even more of it in others. Keep up the good work!