The Wall Street (Yahoo Finance) Wonder Kid

Jonathan Lebed (born September 29, 1984) is an American who, between September 1999 and February 2000, 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.

This is an extremely interesting concept to me. It seem like the situation is half pyramid scheme half legitimate. The reason it seems legitimate is that most of the reason people go into these penny stocks is to day trade or to gamble on the fluctuations. For Lebed to make money other people need to take his advice. So to a certain extent he was making people money besides him self and that is how he made a reputation that could be trusted. Plus even if they don't make money they where gambling in the first place.

Though on the other hand this seem like it had to be a pyramid scheme to begin with there are always going to be losers. The people that buy in early make money off the people buying in latter, which makes the scheme no longer a bet but scam.

The SEC under Arthur Levitt prosecuted him. In 2001 Lebed and the SEC negotiated an out-of-court settlement in which Lebed forfeited $285,000 in profit and interest he had made on 11 trades without admitting any wrongdoing — allowing him to keep close to half a million dollars. Another fascinating thing about all of this is the fact that Lebed made over $750k in 5 months.
The case was controversial — the SEC had never prosecuted a minor — and produced significant media interest. Lebed contended that his activity forecasting stock prices was no different from and no more illegal than what professional Wall Street analysts do every day, only he utilized the internet. Despite the negative press and SEC inquiry, Lebed continues to trade actively. He also sells his trading advice through a newsletter.