Tokyo Joe
Collared for Fraud
Reuters
1:25 p.m. 5.Jan.2000 PST
The Securities and Exchange Commission
filed fraud charges Wednesday against the brains behind
the Tokyo Joe investment advice Web site for allegedly
recommending stocks he was selling, and not revealing
that he received stock in exchange for touting a
company.
The SEC accused Yun Soo Oh Park, known
as "Tokyo Joe," and his company, Tokyo Joe's
Societe Anonyme Corp., of misleading investors by
failing to disclose his holdings, posting false and
misleading results, and touting stocks without revealing
that he received stock in exchange for his
recommendation.
"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," said SEC enforcement
director Richard Walker.
An attorney for Park was not
immediately available for comment. Park resides in New
York and operates his company from there.
Park, 50, charged members up to US$200
a month for access to a restricted area of his Web
site where he dispensed investment advice. Members
also received an electronic mail message that detailed
his daily stock picks and gave other investment advice,
the SEC said.
He posted 10 to 20 messages a day to a
members-only part of his Web site and emailed the same
information to members randomly throughout any given
day, according to the civil complaint filed in US
District Court for the Northern District of Illinois.
Membership in Societe Anonyme grew to
3,800 from about 200 between July 1998 and May 1999, the
complaint said.
"It is a substantial amount of
money [involved], in the hundreds of thousands of
dollars," said Tim Warren, associate regional
director of the SEC's Midwest regional office in
Chicago.
Park allegedly misled his clients by
not revealing that he owned and was selling stocks he
simultaneously was recommending for purchase, a practice
known as scalping, according to the complaint.
Park was also accused of including
gains in stocks he never bought or sold in his
performance results that were listed on the public
portion of his Web site designed to lure in new members,
the charges said.
Between January 1998 and June 1999,
"Park included at least 40 entries for stocks which
he actually traded, for which he reported a gain, when
he actually suffered a loss, resulting in overstatements
up to 100 percent," the complaint said.
The SEC complaint also said Park
failed to disclose to his clients that he received
100,000 shares of DCGR International Holdings in
exchange for touting the company, which manufactures and
markets imported cigars.
The SEC seeks to force Park and his
company to disgorge ill-gotten gains, including
prejudgment interest, as well as impose civil penalties
and bar the two from engaging in these activities in the
future.
The SEC sued Park in Chicago because
the case involves investors nationwide and the city is
convenient to witnesses the agency intends to call, an
SEC attorney said.
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