Off topic - Anthony@promoteAnthony makes it into the WSJ (near end of article).
January 5, 2000
SEC Says 'Tokyo Joe' Sold Stocks
While He Urged Others to Buy
An INTERACTIVE JOURNAL News Roundup
The Securities and Exchange Commission filed a civil lawsuit Wednesday
against a well-known Internet stock picker and his company, alleging he
defrauded investors.
Yun Soo Oh Park -- who goes by the online monikers
"Tokyo Joe" and "Tokyo Mex" -- operates a
hot-stock alert service on the Internet called "Societe
Anonyme" where members pay as much as $200 a
month to receive his daily stock picks over e-mail.
The Web site (www.tokyojoe.com) caters to active
traders who quickly move in and out of stocks.
"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," SEC enforcement division director Richard
Walker said in a statement. Mr. Walker noted that the
growing popularity of the Internet has led to Web
sites "run by self-proclaimed investment gurus" such
as Mr. Park.
Mr. Park, 50 years old, didn't immediately return telephone calls or e-mail
messages seeking comment.
In the suit filed in U.S. District Court in Chicago,
the SEC alleged that from at least July 1998
through June 1999, Mr. Park overstated his
performance record, illegally touted stocks and
engaged in scalping -- selling stocks he was recommending that others buy.
Mr. Park misled members of his Web site, the SEC said. According to its
complaint, Mr. Park failed to tell society members he already owned his
recommended stock picks, and was selling them. At times, the SEC said Mr.
Park would advise subscribers to hold a stock for several days, or wait for it to
reach a target price, before selling it themselves.
Since his recommendations usually pushed up the price of his stock picks, Mr.
Park made "hundreds of thousands of dollars," by such trading, said Tim
Warren, an associate regional director in the SEC's Chicago office.
In a second allegation, the SEC said Mr. Park recruited new members to his
site -- run from his home in New York City -- by posting false and misleading
performance results.
According to the SEC, through June 1999, Mr. Park reported trading gains
ranging from 2% to 1,900%. But, the agency said the results included
hypothetical gains on stocks Mr. Park recommended, but didn't trade. Actual
results were flawed as well, since Mr. Park sometimes used incorrect prices,
omitted some losing trades, and reported profits on trades that lost money, the
SEC said.
"It makes him look like he was much more profitable than he actually was,"
said Mr. Warren. He added that the inflated results means Mr. Park's paying
members "aren't getting an accurate picture of the value of his advice."
A third charge alleges Mr. Park failed to tell members that he accepted shares
of stock from cigar importer DCGR International Holdings in exchange for
recommending it to Societe members in July 1998. The company wasn't
accused of any wrongdoing.
Stock touting isn't illegal, provided details of the compensation are disclosed. In
this case, the SEC said Mr. Park failed to alert members to his own interest in
DCGR stock.
"We believe he is an investment adviser," since he doles out stock advice in
exchange for fees, Mr. Warren said. However, since Mr. Park doesn't have
assets under management, he isn't required to register as an investment
advisor. Neither Tokyo Joe's Societe Anonyme Corp., nor its predecessor, the
Societe Anonyme Corp., is registered with the SEC.
The SEC lawsuit seeks to bar Mr. Park and his company from future violations
of securities laws, and to require him to disgorge his allegedly ill-gotten gains.
The SEC also wants Mr. Park to pay a fine.
A South Korean immigrant, Mr. Park has been a lawyer in Tokyo, a real-estate
investor in Seattle and owner of Tokyo Joe's Classic Burrito restaurant in
Manhattan. He dabbled in stocks for years through brokerage firms, but then in
late 1995 discovered Internet chat boards and a new life. Some of his early
stock picks turned out to be winners, and he began to gather an online
following.
In a July 1999 interview, Mr. Park said that the SEC had begun an investigation
into his online dealings, spurred at least in part by tips from Anthony Elgindy,
another controversial Internet stock picker.
Mr. Elgindy said Wednesday the materials he sent to the SEC included Mr.
Park's posts on Silicon Investor (www.siliconinvestor.com), a popular
stock-chat message board, as well as copies of e-mail dispatches Mr. Park sent
to his Societe Anonyme members. "Tokyo Joe blames me for the whole
investigation, but he painted a target on his forehead when he started to say the
things he did on the Net." Mr. Elgindy said.
The rivalry between Messrs. Elgindy and Park is well-known on Silicon
Investor, where Mr. Elgindy, too, has a large following. Mr. Elgindy regularly
issues his own stock recommendations, and operates a Web site
(www.anthonypacific.com), but he said he's not concerned about running
afoul of securities laws. "I always post what I'm about to do and then I buy it
later. I'm not worried one bit," he said.
A spokesman for the SEC declined to comment on Mr. Elgindy.
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