FOCUS-SEC sues Web site operator 'Tokyo Joe' for fraud|
In case anybody is interested
Wednesday January 5, 4:19 pm Eastern Time
(Adds comment from defendant's lawyer in 5th paragraph)
WASHINGTON, Jan 5 (Reuters) - The Securities and Exchange Commission filed fraud charges on Wednesday against the creator of 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.
Park resides in New York and operates his company from there. His attorney said Park intends to fight the SEC charges.
``I would have hoped the SEC, in this new world of cyberspace, the Internet, day trading, free speech and chat rooms, would have dealt with this matter with regulation instead of litigation,' said Ira Lee Sorkin, Park's attorney.
Park, 50, charged members up to $200 a month for access to a restricted area of his Web site (http://www.tokyojoe.com), 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 e-mailed the same information to members randomly throughout any given day, according to the civil complaint filed in U.S. 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 five 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 Inc. (OTC BB:DCGR.OB - news) in exchange for touting the company, which manufactures and markets imported cigars.
The SEC is seeking to force Park and his company to disgorge ill-gotten gains, including pre-judgment 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.