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What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

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Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#101

Post by dataflow »

AnthonyMouse wrote: post #89
dataflow wrote: post #62

> The messages that Lebed posted would predict marked increases in the stocks value [...] In response to Lebed’s messages, trading volume of these stocks would soar I'm so confused reading the comments here. How in the world is anyone defending this?

> How in the world is anyone defending this? Suppose you're an ordinary trader who likes high risk bets. You find a stock you like, you buy some. Now you go on message boards telling everyone you think the stock is going to the moon straight away. This is your sincere belief. Soon the stock goes up 300%. You thought it was going to go up 1000%, that's what you said before, but hey, it still went up 300%, that's still…

> Whether this is fraud or not basically hinges on whether you were being intentionally dishonest, right?

No.

Do you mean legally? or morally?

Legally the offenses include things beyond what might strictly be "fraud" (see "fraud or deceit" as one example, but there are more [1]). IANAL, but failing to mention that your posts are with the hope of raising the price because you have a vested interest in that... seems like a material omission, if nothing else.

Morally (and I'd expect legally based on the text, but IANAL) what matters is what he expected to happen as a result of his posts on the message board. If he knew people would likely buy the stock in response to his posts, and he intended to take advantage of that influence to make money off those sales, that's the end of the story. Whether he sincerely believed the stock would actually rise regardless is beside the point.

> But now how do you distinguish between malice and stupidity?

I'll assume you mean good faith because stupidity isn't in the picture here. Someone who's genuinely predicting the stock market correctly isn't stupid.

Do you sincerely believe this person didn't expect his messages to raise the stock price, or that he didn't intend to take advantage of such a rise to make money off the stock sales? I sure don't.

[1] https://www.law.cornell.edu/uscode/text/15/77q

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#102

Post by kasey_junk »

giarc wrote: post #90
sour-taste wrote: post #54

There was a recent decision out of Texas that pump and dumps are legal if you do them without directly selling stock to the victims. So I guess that according to Texas what this guy did is totally fine! [PDF] https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rmMOgPQg... or coverage from Matt Levine: https://www.bloomberg.com/opinion/articles/2024-03-21/pump-a...

Wouldn't that mean that you can have a friend do the pump, and you do the dump? Sounds like the guy in the original article did both and therefore wouldn't be saved by that Texas ruling.

The Texas ruling doesn’t (as far as the coverage I’ve read) require that level of separation. Rather just selling to “the market” is enough to insulate you from fraud charges.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#103

Post by gmd63 »

__MatrixMan__ wrote: post #50
gmd63 wrote: post #45

Earlier quoted context omitted.

Cancer is an exploitation of the politics present in human cellular biology. The DNA of what makes us human mammals is molecular capitalism in this analogy. You can dismantle that, but then we would be floating amoebas in the primordial ooze. What you can do is identify when cells aren't behaving in good faith and punish them appropriately (through chemo etc) and find ways to prevent that behavior from surfacing agai…

Agreed, I'm not for dismantling it wholesale, just for being a bit more targeted with our punishments. That is, I don't think that "the markets are up" is not an adequate indicator of "behaving in good faith". You have to look more closely at the actual outcomes. Whatever is being invested in, does it make life better or worse for the rest of us, etc.

I agree we need more keen punishments, and am annoyed by market value being some coarse indicator for economic health. It's been more morally pleasing to me to see criminal companies and "currencies" collapse in the past few years than it has for me to have seen the general market go up, as long term health depends on excising fraud.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#104

Post by AnthonyMouse »

dataflow wrote: post #101
AnthonyMouse wrote: post #89

Earlier quoted context omitted.

> How in the world is anyone defending this? Suppose you're an ordinary trader who likes high risk bets. You find a stock you like, you buy some. Now you go on message boards telling everyone you think the stock is going to the moon straight away. This is your sincere belief. Soon the stock goes up 300%. You thought it was going to go up 1000%, that's what you said before, but hey, it still went up 300%, that's still…

> Whether this is fraud or not basically hinges on whether you were being intentionally dishonest, right? No. Do you mean legally? or morally? Legally the offenses include things beyond what might strictly be "fraud" (see "fraud or deceit" as one example, but there are more [1]). IANAL, but failing to mention that your posts are with the hope of raising the price because you have a vested interest in that... seems li…

> failing to mention that your posts are with the hope of raising the price because you have a vested interest in that... seems like a material omission, if nothing else.

And if you run around telling people that you just bought some of the stock you think is going to the moon, is that supposed to make them less inclined to buy it, or do they now just think you're putting your money where your mouth is?

> what matters is what he expected to happen as a result of his posts on the message board.

Which is the problem. How do you prove what's inside of someone's head? Especially if they are malicious and know what not to say out loud.

> Someone who's genuinely predicting the stock market correctly isn't stupid.

If you think the stock is going up 1000% and it only goes up 300%, you were wrong, and your pick was wrong, and the people waiting for it to go up 1000% before selling are the people who lost money when it went back down. But as far as I know, being initially wrong and then changing your mind before you lose your money isn't illegal.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#105

Post by ehaveman »

from the lewis article:

> 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

if that's not illegal it really should be.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#106

Post by bradleybuda »

sour-taste wrote: post #54

There was a recent decision out of Texas that pump and dumps are legal if you do them without directly selling stock to the victims. So I guess that according to Texas what this guy did is totally fine! [PDF] https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rmMOgPQg... or coverage from Matt Levine: https://www.bloomberg.com/opinion/articles/2024-03-21/pump-a...

The judge in that case simply does not know what they are talking about. This will be swiftly overturned on appeal.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#107

Post by dehrmann »

d0gsg0w00f wrote: post #85
dehrmann wrote: post #40

Earlier quoted context omitted.

> So you trick people by lying to them, and it's ok because you take their money indirectly via the stock market No one was arguing that it was indirect; the people who lost money took advice from an anonymous user on a forum on tiny companies they'd never heard of. The morality question is still interesting because it hinges on whether or not people knew they were playing a game with deception.

These situations always remind me of a quote from Clark Howard who was a radio host of personal finance shows. "It's almost impossible to get scammed if you're not a greedy person"

Mad props to Clark Howard. He's like the Mr. Rogers of personal finance.

also:

Bulls make money, bears make money, pigs get slaughtered.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#108

Post by dataflow »

AnthonyMouse wrote: post #104
dataflow wrote: post #101

Earlier quoted context omitted.

> Whether this is fraud or not basically hinges on whether you were being intentionally dishonest, right? No. Do you mean legally? or morally? Legally the offenses include things beyond what might strictly be "fraud" (see "fraud or deceit" as one example, but there are more [1]). IANAL, but failing to mention that your posts are with the hope of raising the price because you have a vested interest in that... seems li…

> failing to mention that your posts are with the hope of raising the price because you have a vested interest in that... seems like a material omission, if nothing else. And if you run around telling people that you just bought some of the stock you think is going to the moon, is that supposed to make them less inclined to buy it, or do they now just think you're putting your money where your mouth is? > what matter…

I don't have the energy to dissect all this, but you're completely conflating legality, enforcement, and provability. We have juries for a reason. Most would a priori find it hard to believe that someone who found a winning strategy would repeatedly post it on random message boards with altruistic intent.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#109

Post by littlestymaar »

ehaveman wrote: post #105

from the lewis article: > 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 if that's not illegal it really should be.

If A16Z are allowed to buy thousands of their own crypto-hype essay in order to get it listed on NYT best-seller and drive shitcoin prices up, I don't see why random netizens could not do the same kind of things…

Of course we could ban both.

Re: What Happens When a Fifteen Year Old Pumps and Dumps with a Net Profit of $800k? (2002)

#110

Post by dehrmann »

op00to wrote: post #73
dehrmann wrote: post #31

> Lebed professes that he did nothing wrong – he did nothing different from Wall Street analysts Except analysts usually can't trade stocks. Short sellers can. In theory, libel law makes that safe, but when it's a 15-year-old playing the penny stocks, the company won't notice or have the legal firepower to chase down a /r/wallstreetbets user.

analysts can trade stocks, though they are not supposed to trade counter to their recommendations.

When I googled it, it was a little murky on if it's allowed, and sometimes it was the analyst's employer that banned it. What is legal is different parts of the same ~bank not being as independent as they should be, so the kid's argument that the big boys do the same thing wasn't entirely wrong.
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