TOKYO<---GETS SECOND NUKE FROM A@P & WSJ Interactive!!!
January 5, 2000
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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.
Joe Park is Undeniably an Internet-Trading Star (Nov. 1998)
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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