The efficiency of financial markets

[Louis Proyect <lnp3@xxxxxxxxx>]

NY Times Magazine, Sunday, February 25, 2001

Jonathan Lebed: Stock Manipulator, S.E.C. Nemesis -- and 15

By MICHAEL LEWIS

On Sept. 20, 2000, the Securities and Exchange Commission settled its case
against a 15-year-old high-school student named Jonathan Lebed. The
S.E.C.'s news release explained that Jonathan -- the first minor ever to
face proceedings for stock-market fraud -- had used the Internet to promote
stocks from his bedroom in the northern New Jersey suburb of Cedar Grove.
Armed only with accounts at A.O.L. and E*Trade, the kid had bought stock
and then, "using multiple fictitious names," posted hundreds of messages on
Yahoo Finance message boards recommending that stock to others. He had done
this 11 times between September 1999 and February 2000, the S.E.C. said,
each time triggering chaos in the stock market. The average daily trading
volume of the small companies he dealt in was about 60,000 shares; on the
days he posted his messages, volume soared to more than a million shares.
More to the point, he had made money. Between September 1999 and February
2000, his smallest one-day gain was $12,000. His biggest was $74,000. Now
the kid had agreed to hand over his illicit gains, plus interest, which
came to $285,000.

Full article: http://www.nytimes.com/2001/02/25/magazine/25STOCK-TRADER.html


Louis Proyect
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