[TheStreet.com]
The Case Against 'Tokyo Joe' Threatens All Guru-Dom
By Beth Kwon and Gregg Wirth Staff Reporters
1/5/00 9:04 PM ET
In December, "Tokyo Joe" was flying high. About 100 of his fans had paid $1,000 each, some coming from as far away as Europe, to attend his first stock-trading seminar at the posh U.N. Plaza Hotel in Manhattan. Tokyo Joe, also known as Joe Park and TokyoMex, is a former lawyer and New York restaurateur whose real name is Yun Soo Oh Park. In between dispensing stock tips, he even talked about starting up a brokerage firm and a hedge fund early this year.
But on Wednesday came the news that the Securities and Exchange Commission had filed civil fraud charges against Park, which may put a kink in his plans and send a strong message to other would-be Internet stock gurus. (TheStreet.com first broke the news of the investigation in March.)
Park was traveling Wednesday and couldn't be reached for comment.
The case is the first against a so-called Internet daytrading guru. But considering that Congress recently earmarked an additional $7 million for the SEC to do Internet surveillance in 2000, it may not be the last.
"I think there are a lot of gurus who are probably nervous right now," says Mary Calhoun, president of Calhoun Consulting, a Waltham, Mass.-based firm that advises securities lawyers.
And there are plenty out there. Stock-picking expertise litters the Internet, both on Web sites set up by self-proclaimed gurus and on online message boards like Silicon Investor and Raging Bull. Park built a following on Silicon Investor before launching a private site in 1998.
But Tokyo Joe isn't just another colorful character on the Net. Up to 3,800 members pay between $100 and $200 a month for access to his stock-trading calls.
"Tokyo Joe was so influential in moving a stock, even more than some of the analysts at the big Wall Street banks," says James Cerna, founder of InvestorFacts, a site that tries to dispel Internet stock rumormongering. "With so many people using the Internet as their primary source of information on stocks, this may not get at the core of the problem."
But among Park's followers, there's a sense of acceptance of his practices. "If we don't think he's in it to make money for himself then we're foolish," says one member who asked not to be identified.
"I don't believe that Joe would intentionally do anything to hurt anyone," says another member from Minnesota who flew in for the December seminar.
But the SEC says that on "numerous occasions" from July 1998 through June 1999, Park manipulated the market and made hundreds of thousands of dollars in illegal gains by "scalping" -- encouraging people to buy certain stocks and then selling them as soon as the buying began. The SEC also alleges that Park recommended that his members hold shares for several days or assigned a certain price target for a stock while failing to disclose that he was selling his holdings at a price below the target.
And the agency says Park posted false and misleading performance results to attract investors. In one case, he didn't tell subscribers that he had accepted stock from a company in exchange for a positive recommendation, the SEC says.
John Stark, an Internet enforcement chief in the SEC's enforcement division, says there are so many variations of investment guru sites offering such things as advice, picks, strategy and the latest twist, momentum plays, that it's difficult to lump them all together. "Any one of these types of sites could be involved in scalping, disclosure problems and outright fraud, but they are all very different and appeal to different people," says Stark, who couldn't directly comment on the Tokyo Joe case.
But he adds, "We can't hit everybody so I think with every case we bring we are conscious of sending a message that this is a person who did wrong, and this is conduct that we are concerned about."
Other gurus are taking note. Sam Ko, a stock picker known as "Lion Master" who amassed quite a following in a short time and is a founder of TheLion.com, admits the issue of buying and selling stocks you recommend to your members can be hazy. But he also believes that from the Web's small players to the biggest Wall Street analysts, it's difficult to recommend a stock you don't own. "I think everybody does it -- the important thing is disclosure."
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[the March story]
SEC Probes Online Stock Picker TokyoMex
By Gregg Wirth Staff Reporter
3/10/99 5:42 PM ET
The Securities and Exchange Commission has issued subpoenas to some online message posters as part of an investigation into the trading practices of a high-profile online stock picker known as "TokyoMex."
The stock picker, Yun Soo Oh Park, who also goes by the names Joe Park and Tokyo Joe, confirmed that he is at the eye of a wide-ranging inquiry by regulators into his trading practices and disclosure methods.
"I welcome this challenge. I have nothing to hide," Park says, adding that last week he received SEC requests for letters, emails and other information concerning stocks he has recommended over the Internet. Park says he has hired lawyers in Chicago (the SEC's Midwest office issued the subpoenas) and in New York, where he lives.
An SEC spokesman would neither confirm nor deny the existence of any investigation.
Copies of a subpoena obtained by TheStreet.com instruct the recipient to appear before the SEC by March 19 to testify in the "matter of Yun Soo Oh Park, an investigation pursuant to a formal order issued" by the SEC. The recipient also was requested to bring "books, papers, documents and other records" concerning Park. A descriptive memo to the subpoena also cites Park's involvement in his Web site, Tokyo Joe's Societe Anonyme. The site is an online community of message board posters and traders who pay a $100 membership fee to gain access to Park's stock picks.
Park, a Korean native, former lawyer and New York City restaurateur, quickly made a name for himself on Internet message boards and Web sites as a successful stock picker. On Tokyo Joe's Societe Anonyme, he cites several media outlets that profiled him, including TheStreet.com and The Wall Street Journal.
Park attributes the SEC investigation in part to his high profile. "I could have kept my mouth shut," he says. Park also blames his enemies, including some who have been subpoenaed, for complaining to the SEC and sparking the investigation.
TokyoMex, who frequents a popular message thread called "Tokyo Joe's Cafe" on Silicon Investor, in 1995 began to amass a loyal following on message board sites. The three threads attached to Park's name on Silicon Investor total more than 100,000 posts.
From a look at the discussions on the threads and his Web site, TokyoMex and his followers seem to favor the penny-stock world, but Park also has played in big names like Iomega (IOM:NYSE), Polo Ralph Lauren (RL:NYSE) and CMGI (CMGI:Nasdaq), according to published reports and his own Web site.
He has received acclaim from fellow investors who were able to make money alongside him by following his stock picks. He also has received disdain from online opponents who claimed he was selling into the run-ups in stock prices that his recommendations would often cause, leaving his followers with the stock after he moved on.
"They say I'm a pump-and-dump!" Park says. "Who isn't a pump-and-dump?"
Word of the subpoenas was leaking into the online community this week and was quickly disseminated by Park's detractors. "I've been reading some buzz that ... 'TokyoMex' is now being investigated by the SEC," wrote an SI poster called Bill Wexler on Monday. "Can anyone confirm this and significantly brighten my day?"
Park says he is waiting to hear back from the SEC, but has told his 920 members of the Societe Anonyme group, urging them to cooperate truthfully if they are questioned by regulators.