Web Stock Guru `Tokyo Joe' Park Charged With Touting
Washington, Jan. 5 (Bloomberg) -- Internet stock pundit
``Tokyo Joe' Park, whose rapid-fire trading tips have a wide
following on the Web, was charged by regulators with manipulating
securities.
The Securities and Exchange Commission alleged the high-
profile stock picker, whose real name is Yun Soo Oh Park, of New
York, urged investors to buy five stocks without disclosing that
he owned the securities and planned to sell them.
Park, 50, is contesting the fraud charges, which involve the
year between July 1998 and June 1999.
The SEC lawsuit, filed in a Chicago federal court, also
alleged Park failed to disclose that he was paid 100,000 shares
by DCGR International Holdings, a cigar maker, to promote its
stock. DCGR, based in Boca Raton, Florida, wasn't charged.
In addition, Park exaggerated his advertised investing
performance by as much as 2000 percent on at least 30 stocks, the
suit alleged.
Park's lawyer said the SEC should more clearly define the
rules that govern Internet stock recommendations before bringing
such enforcement cases.
``We do not believe that the charges, in the context of free
communication over the Internet, rises to the level in this case
of a violation of the federal securities laws,' said the
attorney, Ira Lee Sorkin of New York.
Park was returning from vacation today and couldn't be
reached.
Tokyo Joe
Park, who posts as many as 20 messages a day under the names
``TokyoJoe' and ``TokyoMex,' has a subscription-based e-mail
club called Societe Anonyme, according to the SEC suit. The club
charges as much as $200 a month to about 3,800 investors. Park
received more than $1.1 million in fees from Societe Anonyme
members during the period at issue, according to the complaint.
Park was ranked by Time magazine's Time Digital as
technology's 49th most important person in 1999, tying him with
TheStreet.com Inc. co-founder James Cramer.
His Web site has a disclaimer that says the Societe ``may
have positions in some of the stocks mentioned on this Web site
or in e-mails, and is under no obligation to disclose the amount
of the position or when it was acquired.'
The Societe ``does not advise investors to buy or sell
securities, instead it alerts investors to stocks whose price
Tokyo Joe believes may rise as a result of momentum, volume,
rumor or other factors,' the Web site says.
His trading philosophy is, ``We go for instant
gratification. We believe that every stock has Unabomber lurking
to take it down. We take our profit and move on,' according to
the site.
`Gray Line'
Park, whose trading records were subpoenaed by the SEC last
March, has said he touted stocks that he owned early in his
career but doesn't anymore.
``Yes, I was walking a borderline, a shadow gray line, but
it was the beginning of cyberspace and investing,' Money
magazine quoted him as saying in its May 1999 issue. ``We don't
do that anymore.'
Park said in a recent interview that he often discloses how
many shares he owns before recommending a stock.
``Everybody knows that I'm buying before you buy, and I'm
selling when you're buying,' Money magazine's money.com site
quoted Park as saying in its April 1999 issue. ``Otherwise, what
am I? A charity?'
`Instant Gratification'
The SEC suit, which is seeking fines and refunds, takes a
different slant. ``He misled and defrauded customers,' SEC
enforcement director Richard H. Walker said.
The suit alleges that, in at least 10 instances involving
five stocks, Park touted securities he owned, describing them as
a sure thing or saying he expected them to double.
He often placed ``limit orders' to sell a stock at a
specified price shortly before or after making his ``buy'
recommendation. Park also urged investors to hold shares of a
recommended stock or claimed it would reach a target price at the
same time he was selling that stock, the suit alleged.
Selling Shares
The five stocks were viaLink Co., an electronic commerce
company in Edmond, Oklahoma; Immune Response Corp., a
biotechnology company in Carlsbad, California; AlphaNet Solutions
Inc., an information technology company in Cedar Knolls, New
Jersey; Videonics Inc., a video equipment maker in Campbell,
California; and K2 Design Inc., an interactive marketing company
in New York.
None of the companies were charged with any wrongdoing.
Park sold all 76,925 of his shares of these stocks after issuing
buy recommendations, the suit alleged.
The suit also alleged Park was given 100,000 shares of DCGR
stock at the request of the company, which makes imported hand-
made cigars under the ``Sir Don' and ``Adolfo' brand names.
After recommending that investors buy DCGR stock, Park sold his
shares on July 21, 1998, the SEC contended, when the stock closed
at 3 17/32.
The SEC has been cracking down on alleged fraud conducted on
the Internet.
Last month, the SEC charged three California men, including
two recent University of California at Los Angeles graduates,
with illegally netting $364,000 by using Internet chat rooms to
manipulate a stock. Two of the men, Arash Aziz-Golshani and
Hootan Melamed, were indicted earlier this week by a federal
grand jury in Los Angeles. |
