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Fifteen-year-old Jonathan Lebed, the youngest person ever pursued by the SEC in an enforcement action, made over $800,000 in six months by promoting stocks on Internet message boards. Using several fictitious screen names, Jonathan posted hundreds of messages on Yahoo! Finance, hyping selected over-the-counter stocks and then promptly selling his pre-purchased shares as soon as the stock prices rose.

Publicly, the SEC painted a picture-perfect case of securities fraud. Yet, the SEC forced disgorgement of only $285,000 of Jonathan's profits, leaving many observers to wonder why the resolution of this supposedly clear-cut case left its teenaged perpetrator with over $500,000. The skepticism heightened when Michael Lewis, in an influential article in The New York Times, suggested that the SEC's pursuit of Lebed was partially motivated by a desire to keep a “little jerk” (to quote one SEC investigator) from outsmarting federal regulators. The Lewis article further portrayed a regulatory agency fundamentally unable to adapt to the challenges of regulating fraud on the Internet.



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