High school senior admits tale of $72m stock-trading fortune was …
Mohammed Islam says he has made tens of millions of dollars in financial markets. Photograph: LinkedIn
A Stuyvesant high school senior who reportedly made more than $72m trading oil and gold futures has admitted he invented the tale as a hoax.
Mohammed Islam, 17, told New York Magazine that he made enough to buy a BMW, rent a fancy apartment and turn down Wall Street jobs that pay $12,000 a month. None of that was true.
The tide began to turn against Islam just before he and his friends were scheduled to appear on the financial news network CNBC. Islam demurred. CNBC, saying the initial $72m number was overblown, said his earnings were a “few million dollars” though Islam declined to be specific. The author of the New York Magazine profile, Jessica Pressler, said she saw the teenager’s bank statements and was comfortable with the $72m figure.
Later, however, Islam came clean to a reporter from the New York Observer: flanked by lawyers and public relations advisors, he admitted he had made zero dollars trading. He also clarified that his school’s investment club only makes simulated trades and does not earn money for its members.
“Swept up in a tide of media adulation, they made the whole thing up”, the New York Observer wrote.
Islam admitted to a reporter the tale was “total fiction.”
The son of Bengali parents in Queens – who he fibbed wouldn’t let him move to the multimillion-dollar apartment he can afford to rent – said he traded stocks during the summers and oil and gold the rest of the year. Now, Islam says, his parents, horrified by his lie, won’t speak to him.
Islam said he gained access to New York Magazine through a friend’s father who works there.
The hoax was thorough, including an ostentatious show of wealth by Islam and his teenage pals. “What makes the world go round? Money,” Islam told a reporter from New York magazine over caviar and apple juice at the “aggressively priced” New York restaurant Morimoto.
Islam said he learned to trade penny stocks at age 11 from an older cousin who now works for Goldman Sachs. After some success, Islam said in his false tale, he switched to oil and gold futures, making a fortune before graduating high school.
Islam said that he lost his tutoring money on his first trades and spent all his time subsequently learning modern financial theory. He said he is a big fan of billionaire investor Paul Tudor Jones, whose ideas helped him return to trading in spite of losses. Tudor Jones recently had Bon Jovi and members of Creedence Clearwater Revival play at his 60th birthday party in upscale Greenwich, Connecticut.
Islam said school often got in the way of the trades it turns out he never made. Classes during the day left him without the constant vigilance required to trade stocks, he fibbed, which was the reason he gave for allegedly switching to commodities, which are far more difficult and intricate to trade.
In the hoax, Islam said that after finishing his homework, he would spend his nights trading oil and gold. He claimed he preferred to save the stock trading for the summers, when his days are free, and for those days when he isn’t having a good run with futures.
Islam’s school, Stuyvesant High, is incidentally located near Wall Street. The young investor started the school’s Investment Club, which meets twice a week. The club routinely competes in investing competitions with other high schools around the country.
Mo, as he is known to friends, keeps a blog he updates sporadically and belongs to an investing community called Leaders Investing Club. The collective is reflective of a growing community of young people, most of them still in high school, whose bookshelves are probably shared by comic books and finance theory.
In fact, the website counts among its top members other boys (and a few girls) like Islam who spend after-school hours on trading and count star investors such as Tudor Jones and Warren Buffett as their heroes.
The website Business Insider profiled 20 such teens in a 20 Under 20 list for Finance last year. After appearing on the list while still in his junior year, Islam says he was offered jobs by several investment firms in New York that paid $9,000 to $12,000 per month.
“My favorite part of this institute is risk,” Islam told his school paper, describing how his hands were shaking during his first trade. “Every day is a new experience, and you never get used to it.”
Islam said he was being courted by hedge fund managers offering hundreds of millions, according to New York magazine.
But the teenager claimed he washatching plans to start his own hedge fund with two friends his age.
Islam and his teenaged partners said they had ambitious plans, hinting that they aim to make $1bn in returns in the coming years. That would be difficult as they’ve currently earned nothing.
Islam’s parents, he said in the original tale, are “skeptical” of the stock market and the finance industry. But he claimed his good fortune helped to thaw their doubts. He wove an elaborate tale, claiming that his acquisitions include a BMW – which he’s not old enough to drive – and a Manhattan apartment, which he couldn’t live in yet.
Islam said he sees trading as a fellowship. “We want to create a brotherhood. Like, all of us who are connected, who are in something together, who have influence, like the Koch brothers,” he told a journalist.
Other young traders have attracted attention – some deserved, and some not. One of the disappointments was Jonathan Lebed, a 14-year-old who had to give up some of his gains to the Securities and Exchange Commission in 2001. Another UK-based boy wonder, 23-year-old Alex Hope, was arrested by the FSA for unauthorized trading.
Others do go on to make it in the business. Harris Kupperman, a young star in 1999 who learned to day-trade at Philips Academy in Andover, Massachusetts, went on to create his own hedge fund, which is now closed to investors.
This story has been updated slightly with breaking news, to reflect the rapid changes in Islam’s claims about his trading gains. Initially, the story related the claims in New York Magazine, reflecting they were only reported in a major news outlet and not independently confirmed. Later, the story was updated to reflect Islam’s denial of his $72m fortune, then his admission that he invented the story. The changes were to verb tense to reflect the speed of breaking news, and not to the substance of the story.
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High school senior admits tale of $72m stock-trading fortune was …
