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10th Grader Charged With Securities Fraud

The boy allegedly used Internet message boards in a classic 'pump-and-dump' operation.

Internet stock manipulation and securities fraud isn't just for adults anymore.

Just ask 15-year-old Jonathan Lebed of Cedar Grove, N.J.

The

Securities and Exchange Commission

on Wednesday charged Lebed, who is in 10th grade, with securities fraud and ordered him to pay back $285,000 in alleged illegal stock earnings and interest.

The SEC alleges that Lebed used Internet message boards to talk up, or manipulate, stock prices and then unloaded his positions in what agency administrator David Horowitz called a classic "pump-and-dump" operation.

Lebed was 14 at the time he traded in the nine stocks. On occasion he placed sell limit orders on stocks so that he wouldn't miss a price increase in the security while he was in school the next day, the SEC said.

"He was as sophisticated in doing it as anybody who is older, let's put it that way," said Horowitz, assistant district administrator of the SEC's Philadelphia district office, which announced a settlement with the boy.

The case is the first securities fraud action the SEC has brought against a minor. As part of the settlement, Lebed has promised not to violate securities laws in the future.

Kevin Marino, a Newark, N.J., lawyer representing the youth, said Lebed and his family were pleased with the settlement. As is typical of such agreements with the SEC, the boy neither admitted nor denied guilt.

Horowitz said Lebed has had an interest in stock trading since he was even younger, and maintained a brokerage account in one of his parents' names.

Marino said the youth is an adept investor and "quite computer-literate." "Mr. Lebed, as a teenager, was successful in a school-sponsored investing contest," he added.

Horowitz said he didn't know whether the SEC action would remain on Lebed's record after he becomes an adult. Many criminal charges against minors are removed from their record once they become 21, but the SEC charges are in the form of a civil lawsuit.

"I would suspect that it's there for the world to see," Horowitz said.

Marino disagreed, saying he wouldn't "expect that to be the case."

The stocks Lebed manipulated between August 1999 and February were all thinly traded micro-cap securities, Horowitz said. They included

Manchester Equipment

(MANC)

,

Just Toys

TST Recommends

(JUST.OB: OTC BB),

Yes Entertainment

,

Fotoball USA

(FUSA)

,

Man Sang Holdings

(MSHI.OB:OCT BB),

West Coast Entertainment

(WCEC)

,

Havana Republic

(HVAR)

,

Classica Group

(TCGI)

and

Firetector

(FTEC) - Get Report

, Horowitz said.