Jonathan Lebed Case Study
In 2000, Jonathan Lebed caused havoc in the stock trading industry. This 15 year old boy was accused of pumping and dumping' stocks over the internet. Jonathan actions proved that the internet can be a very powerful tool for fraud. This incident makes it evident that investors needed to take a closer look at the information they are receiving from the internet because information is being placed there by various persons whom may have bad intentions.
There is not much difference between the actions of Jonathan Lebed and that of professional financial analyst. Financial analyst makes predictions about the market everyday some of which are close and other are off target. These predictions are made based on the financial analyst examination of the stock market. Many analysts have different views regarding the same stocks however no one knows whose results are on target until the results from the stock market are revealed. Jonathan Lebed made his prediction based on his opinion of the performance of the stocks, the only difference between him and the financial analyst was his age and the lack of a degree. Financial analysts are not allowed to invest in the stocks they advice on however their clients can make investment decision based on their analyst predictions. Although some of these financial analyst predictions fall short of the true stock market performance their are not penalized for there errors in predictions, however Jonathan Lebed was penalized with a fine of almost $300,000 for his actions.
The SEC found Jonathan Lebed guilty of wrong doing under Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 which addresses fraud in the use on interstate commerce. Under these acts it is unlawful for a person to intentionally provide false statements for the purposes of deceiving buyers. Although this law does not state anything specific about internet use, the SEC was able to use this law based on the sentence
There is not much difference between the actions of Jonathan Lebed and that of professional financial analyst. Financial analyst makes predictions about the market everyday some of which are close and other are off target. These predictions are made based on the financial analyst examination of the stock market. Many analysts have different views regarding the same stocks however no one knows whose results are on target until the results from the stock market are revealed. Jonathan Lebed made his prediction based on his opinion of the performance of the stocks, the only difference between him and the financial analyst was his age and the lack of a degree. Financial analysts are not allowed to invest in the stocks they advice on however their clients can make investment decision based on their analyst predictions. Although some of these financial analyst predictions fall short of the true stock market performance their are not penalized for there errors in predictions, however Jonathan Lebed was penalized with a fine of almost $300,000 for his actions.
The SEC found Jonathan Lebed guilty of wrong doing under Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 which addresses fraud in the use on interstate commerce. Under these acts it is unlawful for a person to intentionally provide false statements for the purposes of deceiving buyers. Although this law does not state anything specific about internet use, the SEC was able to use this law based on the sentence