an 5, 2000 - 04:54 PM
SEC Sues 'Tokyo Joe' for Alleged Securities Fraud on
Internet
The Associated Press
WASHINGTON (AP) - Federal regulators on Wednesday sued a
man who calls himself Tokyo Joe for allegedly defrauding investors
on his Web site by failing to tell them he was selling the same
stocks he was advising them to buy.
The man's attorney said he will contest the allegations in court.
Tokyo Joe, described as a self-proclaimed expert in day trading,
charged members of his investment club up to $200 a month for
stock picks and other advice, the Securities and Exchange
Commission said.
Those membership fees amounted to more than $1.1 million from
July 1998 through June 1999, the SEC said in its civil lawsuit filed
in federal court in Chicago. The agency also alleged that Tokyo
Joe, 50, a New York City resident whose real name is Yun Soo Oh
Park, illegally touted a stock to investors without disclosing he had
received shares from the company and lied about his trading
performance record.
In its suit, the SEC is seeking injunctions against Park and his
company, Tokyo Joe's Societe Anonyme, as well as unspecified
fines and restitution to investors.
Park's attorney, Ira Lee Sorkin, a former top SEC official, said his
client will contest the suit.
"We intend to defend against the action," Sorkin said. "I would
have hoped that the SEC would have dealt with these issues ...
(such as use of the Internet and day trading) through regulation as
opposed to litigation. There are some very murky issues."
The SEC's suit was the latest in a string of enforcement actions in
recent years against alleged securities fraud using the Internet.
Federal and state securities regulators say this new form of fraud
has been proliferating in Internet junk mail, online newsletters,
electronic "chat rooms" and Web sites.
Because the Internet is everywhere, unscrupulous stock promoters
anywhere in the world can cloak themselves in anonymity and lure
investors across the country, who have lost millions in such
schemes, the regulators say.
"The Internet has witnessed the rapid growth of Web sites run by
self-proclaimed investment gurus," said SEC Enforcement Director
Richard Walker. "Today's action makes clear that we will not
tolerate fraudulent conduct or undisclosed conflicts of interest by
those peddling investment advice on the Internet."
Park, who never registered with the SEC as an investment adviser,
operated his Societe Anonyme from his home in New York, the
agency said in its suit.
It alleged that Park misled members of Societe Anonyme by failing
to disclose or lying to them about the fact that he already owned -
and was selling - the same stocks he was advising them to buy.
Park profited by selling the stocks into the buying flurry he had
created by his recommendations, a practice known as scalping,
the SEC said.
On some occasions, Park advised members to hold a stock for
several days or longer or designated a target stock price while he
actually sold the same stock, sometimes below the target price,
the SEC said.
In addition, the regulators alleged, Park posted trading
performance results on his Web site that were "materially false
and misleading," in an effort to recruit new members and get
current members to follow his investment recommendations.
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