Top World News
Fri, 14 Jan 2000, 12:44pm EST
'Tokyo Joe' Park Says Touting Charges by SEC Ignore His Cautionary E-Mails
By Neil Roland
'Tokyo Joe' Park Says SEC Charges Ignore His Blunt Warnings
New York, Jan. 13 (Bloomberg) -- Internet pundit ''Tokyo
Joe' Park says federal charges that he manipulated stocks and
misled investors about his personal trades are baseless.
Park, in his first public comments since the Securities and
Exchange Commission filed civil fraud charges against him last
week, said he routinely sends cautionary e-mails to his 3,600
customers. While his language may sometimes be crude and
insulting, Park said his clients understand that he owns every
stock he recommends and plans to sell his shares quickly.
''I tell them daily that I'll be sitting on their fat,
greedy faces if they jack up the prices without first checking
the fundamentals,' said Park, while sitting in front of five
computer trading screens and a pastel self-portrait in the office
of his Manhattan apartment.
Park said the SEC's Jan. 5 suit hasn't hurt his business,
with 78 new customers enrolling since the complaint was filed.
SEC enforcement director Richard H. Walker said Park's
disclosures weren't frequent enough, and deceived investors.
Park, 50, whose real name is Yun Soo Oh Park, is one of the best-
known stock pickers on the Web and the most prominent Internet
operator to be charged by the SEC.
Park has a subscription-based e-mail club called Societe
Anonyme that charges as much as $200 a month to clients in 18
countries, including Russia, Dubai and New Zealand. He has made
about $10 million from fees and investments in the last two
years, which has raised his total assets to about $15 million, he
said. He posts as many as 20 messages a day on his TokyoJoe.com
Web site, named after a London nightclub he used to frequent.
'Take Your Money'
Clad in a white sweatsuit, Park said his disclosures advise
clients to avoid buying a stock right after he recommends it
because they will push up its price at a time when he will be
selling. He gave Bloomberg News a cautionary Dec. 16 e-mail that
he sent to clients. It said: ''I will buy before you, I will sell
into your greed, and take your money, every single time.'
The SEC, which has been cracking down on questionable Web
stock sales for 18 months, accused Park of recommending five
securities without telling investors that he owned them and
planned to sell after his endorsement. His recommendations led to
spikes during which he sold his own shares, the agency's Jan. 5
lawsuit alleged.
For example, he recommended Videonics Inc., a video
equipment designer, on Feb. 17, 1999, without disclosing his
personal plans, the suit alleged. Its stock rose to $1.37 a share
that day from 78 cents the day before, during which Park sold
some of his shares. He sold more of his shares the next day, when
the stock rose again to $2, the complaint contended. It fell
steadily to $1.09 over the next week.
Investment Adviser?
The SEC suit, filed in Chicago federal court, alleged Park
made $1.1 million in fees between July 1998 and June 1999 while
acting as an investment adviser. ''He misled and defrauded
customers by failing to make certain routine disclosures and
disclaimers,' Walker said in an interview.
Although Park has a disclaimer on his Web site that says he
is not an adviser, the SEC contended that in effect he is, and
thereby incurs disclosure obligations. The agency is seeking
fines and refunds.
A legal expert said the SEC's claim that Park is an
investment adviser ''is sending shock waves' through other Web
stock pickers. These pundits fear that they may have to register
with the SEC, which would subject them to closer oversight and
new restrictions, if the agency prevails in this case, Columbia
University law professor John Coffee said.
Comment From Clients
Many of Park's customers expressed support for him, saying
he routinely disclosed his trading plans while urging them to
research a stock and not act hastily. Bloomberg News contacted
several customers after Park invited his members to comment on
his disclosures in e-mail to this news organization.
''He is best -- I will stand up for him, and his
integrity,' Jennifer Gould of New York City wrote in an e-mail.
Another, Paul Armstrong of Toronto, said in an interview,
''He's an astute student of the market who's never engaged in any
deception.' Armstrong said he has made about $500,000 in the
last two years as a member of Park's club.
Others, however, complained that, while Park initially
discloses his purchase of a stock, he doesn't keep investors up-
to-date about whether he remains an owner or has sold.
''I wanted to take my cues from his trading, but was often
confused about what to do because he'd keep pushing a stock
without saying whether he was in or out,' said former customer
Chris Perry of San Luis Obispo, California.
Condos, Burritos
Park said he emigrated to the U.S. from South Korea in 1990
after working as a marketing executive for multinational
companies in Japan, England, and other countries. He invested in
10 condominiums in Seattle before starting four burrito
restaurants in New York. He says he has U.S. citizenship.
Park began trading his own stocks in 1997 after losing money
investing through a traditional broker, he said. He attracted a
following by posting stock picks on the Silicon Investor message
board and Raging Bull.com Web site, and set up his own Web site
in June 1998.
Opera music plays constantly in his office, but it doesn't
calm Park as he reflects on the SEC suit. ''I'm determined to
fight this because I've done nothing wrong,' he said in a raised
voice. He said he is seeking to restore his reputation and uphold
principles of Internet commercial freedom.
''When a tiger dies, he leaves his skin, and when a man
dies, he leaves his name,' Park said.
Empowering Individuals
Park said his challenge to the SEC suit will advance a
larger cause that he called ''the empowerment of individuals to
make their own financial decisions.' The SEC, he said, ''wants
to use me as an example to develop Internet case law that suits
traditional brokers.' He said he wants to comply with SEC
guidelines but that few have applied to Internet stock picking.
His attorney, Ira Lee Sorkin of New York, said that the SEC
suit makes claims that could impinge on Park's freedom of speech.
Park need only disclose generally -- as he does on his Web site -
- that he may own shares of stocks he recommends, Sorkin
contended.
A disclaimer on Park's site says that he ''may have
positions in some of the stocks mentioned on this web site or in
e-mails.' He said he has posted this disclaimer since setting up
his Web site.
Sorkin said rules applying to the Internet may be more
lenient than those that involve newsletters and phone calls, and
that the SEC is trying to shore them up through an enforcement
case rather than regulation.
Fraud Charges Central
Coffee, of Columbia University, said that none of Park's
legal defenses will carry weight if the SEC can establish that he
misled investors. ''There's no First Amendment protection for
fraud, whether you're doing it in a newspaper, over the phone or
on the Web,' he said.
The SEC suit made other allegations, including that Park
failed to disclose a 100,000-share gift he received from DCGR
International Holdings, a Florida cigar maker, to promote its
stock.
Park acknowledged receiving the shares, but said he got them
after telling customers that the stock was a low-risk investment
at eight or 10 cents a share. ''That wasn't a recommendation, and
beside, I couldn't disclose something I didn't have at the
time,' he said.
Donated Proceeds
Park said he sold the shares the same day he received them
in July 1998, and donated the $4,800 proceeds to his daughter's
private school. He said he then urged his customers to sell the
stock.
The SEC also accused Park of exaggerating his advertised
investing performance by as much as 2000 percent on at least 30
stocks. ''It's possible I made some inadvertent human error,'
Park said. He defended the price data used in these calculations,
which the SEC said was inflated.
Park, summarizing his investment philosophy, compared
investors to surfers.
''They should be like surfers who study the waves all day
long before picking one to ride, rather than like schmucks who
ride every wave, big and small, and probably drown,' he said.
Park, who said he is fluent in six languages, said he speaks
bluntly to customers ''to try to change their lives.'
'I Spit on Them'
''I slap them, I spit on them, I kick them out, I don't give
a s--- about their $100 or $200 a month,' he said. ''Some
people are thick, they don't get it.'
He said he was banned from the Silicon Investor bulletin
board last year for ''abusive and insulting comments.'
Park said he plans to start a hedge fund later this year,
and has 88 investors who have already committed $50 million. He
also is buying 10 percent of a new online brokerage that is due
to open in the next few months with the accounts of 1,200 of his
members. |
