Lest anyone wonder if there is money to be made being a high-profile stock tout... how is $10M over two years? ;^)
=====
Tokyo Joe seeks dismissal of SEC lawsuit
By Bloomberg News
March 30, 2000, 11:50 a.m. PT
CHICAGO--Web pundit "Tokyo Joe" Park asked a federal judge to dismiss the Securities and Exchange Commission's lawsuit against him, arguing that he functions as a newsletter publisher with constitutional free-speech rights.
The SEC, in filing a civil fraud case against the prominent stock-picker in January, said it wants to toughen standards for dozens of other Internet pundits by securing a landmark court judgment.
The federal agency's suit contends that Tokyo Joe, whose real name is Yun Soo Oh Park, is an investment adviser who should be subject to anti-fraud rules, alleging that he failed to disclose personal trading of stocks that he recommended.
Park responded that the SEC's premise is unfounded because he doesn't offer the personalized advice to clients that an investment adviser would provide.
"Park has no professional relationship with anybody who reads his editorial content. There is no allegation that he even knows any of their names," Ira Lee Sorkin, Park's lawyer, wrote in the motion filed Tuesday. "Rather, defendants are the publishers of impersonal investment advice and commentary."
The SEC suit, filed in Chicago federal court, also failed to identify anyone who was defrauded by Park or any specific communications that were misleading, his motion alleged.
An SEC representative declined to comment. The SEC has until April 11 to respond in court.
The court's decision on whether Park, one of the Web's best-known pundits, is the equivalent of an investment adviser or a newsletter publisher will help determine the extent of the SEC's authority over Internet stock pickers.
The SEC wants to subject Park to the same anti-fraud rules as the 24,000 investment adviser firms in the United States. If the federal agency prevails, some Internet stock pickers may have to register with the government as advisers and be subject to routine inspections.
"We're concerned about the proliferation of stock gurus who charge investors for advice," SEC enforcement director Richard H. Walker has said.
The SEC has been conducting a broad investigation of Internet stock pickers in recent months. Park was the first to be charged by the SEC in its two-year battle against manipulation on the Web.
If the courts decide that Park acts as a publisher rather than as an investment adviser, the SEC's case could be undercut by a 1985 Supreme Court ruling that limited the agency's authority to police stock-advice newsletters. The high court said the SEC couldn't treat publisher Christopher Lowe as an investment adviser because he gave only "nonpersonalized" advice to general readers.
Park, 50, charges as much as $200 per month to 3,600 members of his Societe Anonyme club from 18 countries, including Russia, Dubai and New Zealand. He said he has made about $10 million from fees and investments in the past two years.
"I never, never advise individually," he has said.
The SEC suit also alleged that Park failed to disclose receiving free shares in exchange for touting a stock and inflated his advertised investment performance on 800 occasions. He has denied these allegations.
Park can win on the SEC's claim that he is an adviser but still incur a fine by losing on some other portions of the suit. In that case, the judge's findings would have implications for Park alone, but not for other Web stock pickers.
Copyright 2000, Bloomberg L.P. All rights reserved. |
