How CNBC vetted the 17-year-old investor scam

Jana Kasperkevic and Heidi Moore of The Guardian write Saturday about how a 17-year-old high schooler from New York was able to convince some business publications to write about his non-existent trading success without any verification and how CNBC backed away from the story.

Kasperkevic and Moore write, “They were 15 minutes late to CNBC, and by the time they got there, a source says the kids were nervous – so much so, in fact, that another source says they didn’t want to get out of the car.

“Eventually a CNBC producer escorted the kids into the building and to the office of CNBC editor-in-chief Nik Deogun, a former top editor at the Wall Street Journal. Deogun started peppering the kids with questions: how much money was involved, the initial strategy, details of the stocks and other trades. Islam described a strategy that ranged from penny stocks to options and the most arcane products on Wall Street: derivatives. Islam, visibly nervous, did most of the talking, according to a source familiar with the conversation.

“Deogun asked: ‘It’s not $72m, is it?’ Islam acknowledged it wasn’t and said he didn’t know where the number came from. Deogun then presented an option to the teenagers, according to a source familiar with the conversation, giving the kids a warning to the effect of: ‘You cannot lie on our air … eventually, it’s going to come out. We’re going to ask you tough questions and just know you can’t lie.’ Then Deogun asked them if they still wanted to go on the show.

“Islam and Tulemaganbetov asked for time to confer privately in another office. Islam appeared ‘terrified,’ said a source familiar with the scene. When they returned to speak to Deogun, they decided to back out.”

Read more here.