What Does Jonathan Lebed Share With Mary Meeker?

Mar 02 2001

He's maybe as smart, but not as lucky. We're talking about Jonathan Lebed, the New Jersey teen fined by the Securities and Exchange Commission in September for goosing up share prices with his overenthusiastic, occasionally misinformed comments. The March issue of Money homed in on Lebed's relationship with convicted felon Ira Monas. And on Sunday, Michael Lewis' report for the New York Times Magazine indicates that even the SEC doesn't know why it prosecuted Lebed for the grandstanding that's daily fare on Wall Street and in the financial media.

Lewis, author of The New New Thing, can't figure out what the SEC is so hopped up about. So what if Lebed deciphered how the money system functions and then worked it for himself? Analyst Mary Meeker did the same thing, he pointed out. After a boffo couple of years chatting up stock prices, she pocketed a $15 million compensation package from her grateful employer, Morgan Stanley Dean Witter. So why did the SEC prosecute Lebed and not Meeker?

The SEC officials Lewis interviewed expressed outrage at the teenager's behavior, but they can't quite explain what he did wrong. Who got snookered by the teen? The producer for a 60 Minutes segment on Lebed told Lewis that the SEC never followed through on its promise to furnish the name of a victim of Lebed's activity on the stock-message boards. Even the much-lauded former SEC Chairman Arthur Levitt couldn't articulate Lebed's crimes, or even his actions, Lewis reports. Director of Enforcement Richard Walker deemed the teen guilty of manipulating the market, but Lewis had a counterpoint: Aren't the analysts, fund managers and CEOs who plug stocks on TV guilty of the same thing? If an analyst can take the share price of a company that's losing billions of dollars and juice it up 50 points in a day, isn't that "artificially raising" the stock's price, which is the same accusation Walker leveled at Lebed?

Lewis calls the law "perfectly circular." That is, except when it came to Lebed. For him, securities law was a straight path to notoriety. And perhaps Hollywood: The New York Daily News reported Friday that Lewis has already fielded more than a dozen offers for a script based on Lebed's story.