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Pastimes : Can SI Members Really Manipulate Stocks? -- Ignore unavailable to you. Want to Upgrade?

To: Arcane Lore who wrote (425)	3/31/2000 10:33:00 AM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 461

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.

To: Arcane Lore who wrote (425)	8/8/2001 3:14:12 PM
From: Arcane Lore	Read Replies (1) \| Respond to of 461

From the SEC Digest: SEC SETTLES SECURITIES FRAUD CHARGES AGAINST FRED MOLDOFSKY The Commission announced today that it has reached a settlement with Fred Moldofsky to resolve a civil action alleging violations of the antifraud provisions of the Securities Exchange Act of 1934. Moldofsky, a Canadian citizen and a resident of Texas, is a day trader. The complaint, filed in the United States District Court for the Southern District of New York on March 30, 2000, alleges that on March 22 and 23, 2000, Moldofsky made a series of materially false and misleading statements about Lucent Technologies, Inc. on a Yahoo! Finance message board. According to the complaint, he did so by posting at least twenty fraudulent press releases announcing that Lucent would not meet analysts' earnings estimates for its fiscal quarter ended March 31, 2000. Moldofsky consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. A civil penalty was not imposed based on Moldofsky's sworn representation in his Statement of Financial Condition submitted to the Commission. In a related criminal proceeding, on March 8, 2001, Moldofsky was convicted by a jury of securities fraud for his false postings relating to Lucent. Moldofsky is scheduled to be sentenced in September 2001. The SEC acknowledges the assistance provided by the U.S. Postal Inspection Service and the U.S. Attorney's Office for the Southern District of New York in connection with this matter. See LR-16493. [SEC v. Fred Moldofsky, U.S.D.C. for the Southern District of New York, Civil Action No. 00 Civ. 2425, LTS] (LR-17095) sec.gov

To: Arcane Lore who wrote (425)	1/27/2003 9:44:13 AM
From: Arcane Lore	Respond to of 461

From the Wall Street Journal Online: REAL TIME By TIM HANRAHAN AND JASON FRY The West Gets Less Wild; Rosen's Grace Under Fire You've likely never heard of Fred Moldofsky, but his sentencing last week provided an helpful reminder of how nutty the stock market got during the late '90s, aided and abetted by the Internet, and how much things have changed since. Mr. Moldofsky, a former day trader who now works in a Texas refinery, was sentenced to the two months he'd already served, plus six months of house arrest. His crime: posting fake news about then-highflying Lucent Technologies in March 2000, which happened to coincide with tech stocks' peak. According to the Securities and Exchange Commission (which settled its case last August), Mr. Moldofsky went onto online message boards and posted several messages using the alias "kahuna_and_the_brain." At first, he merely reported rumors that Lucent wouldn't meet its quarterly earnings targets. (Kahuna and the Brain are the nicknames of CNBC's morning commentators.) That night, he took it further, and using the alias "hot_1ike_wasabe," he posted a message with the headline: "Lucent Releases Earnings Warning! Damn!" Attached was a phonied-up earnings warning from Lucent. There is a big gray area as to what's legal or illegal in stock chat boards, which have always involved a lot of trash talking and suspect motives. But while the SEC will occasionally go after successful stock-board manipulators to send a message, like 15-year-old Jonathan Lebed, it generally leaves people alone. There are free-speech issues, and also a question of who exactly the victim is. But Mr. Moldofsky, by creating and disseminating the fake press release, crossed a pretty unambiguous line. It was also too big a fish: While Internet scams have sometimes involved large companies, they are generally fairly obscure to the average investor -- Geron, Emulex and PairGain are three examples. But Mr. Moldofsky picked the most widely held stock in the country. Lucent was trading in the mid-60s, and dipped to just above $60 before recovering when the company disavowed the release. A lot of ordinary people took a hit. (Little did they know Lucent would later see its business collapse: Its stock now trades at about $2 a share. That is, people who sold on the bad "news" got out right before the bubble burst.) In Mr. Moldofsky's sentencing, the judge also set a $4,000 fine to make it clear that "you can't have people posting messages on the Internet willy-nilly." That era is over, of course, and a fake posting today would draw a shrug at most. Last June, for instance, a 17 year old posted a made-up news article about a thinly traded company called Viragen, claiming it had received approval for an anthrax drug. The stock didn't budge. In fact, an SEC official said at the time, "We found no one who read the postings and believed them." The FTC tracked the teenager down in under two days, he confessed, and his dad, a minister, liquidated the account. [...]