In this case study we learn about Jonathan Lebed, at 15 years old, the youngest person during that time and the first minor to ever to face proceedings by the SEC for stock-market fraud. In 2000, Jonathan Lebed caused chaos in the stock trading industry and was accused of “pumping and dumping” stocks over the Internet. Between September 1999 and February 2000 Lebed made hundreds of thousands of dollars by posting in internet chat rooms and on message boards encouraging people to buy penny stocks he already owned, thus, according to the SEC, artificially raising the price of the stock. Lebed was found guilty by the SEC 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. The SEC settled with him for a $285,000 of his earnings. His actions proved that the Internet could be a very powerful tool for fraud.
The moral tone of the case study we were given to read, written by Michael Lewis, almost seemed to be a defense as to why what Jonathan had done should have been acceptable. Lewis seemed to portray Jonathan as just a kid doing what all financial analyst and stock gurus do daily, but since Jonathan was 15, and doing it well, then the Securities and Exchange Commission was “picking” on him. At times in the story their was a sense on emotional disarray, and no one wanting to be the blame or accept responsibility for the situation, especially between Jonathans, his mother, and father.
Broader Ethical Perspective:
In the case it was obvious that Jonathan did not have the best interest of all the parties involved in his best interest, which to me constitutes for one of the first red flags of the lack of ethical behavior. He also never showed care or any remorse of any potential wrong doing for anyone who may have been a victim to his gimmicks; he never took responsibility for his actions.
Courtney from Study Moose
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