Securities and Exchange Commission
said Wednesday that it had filed civil fraud charges against Yun Soo Oh Park, who is known on the Web as
, accusing him of providing misleading investment information to subscribers of his Internet-based service
Tokyo Joe's Societe Anonyme
In its first case against a so-called Internet daytrading guru, the SEC is charging that the Korean-born Park, 50, a former lawyer and restaurateur with no known professional investing experience, engaged in a scheme to defraud people who subscribed to his Web site,
The SEC said that on "numerous occasions" from July 1998 through June 1999, Park, who lives and works in New York City, manipulated the market and made hundreds of thousands of dollars in illegal gains through a practice known as "scalping" -- encouraging people to buy certain stocks and then selling them as soon as the buying spree begins.
The SEC also alleged 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.
In addition, Park posted false and misleading performance results to attract investors, the SEC said. In one case he did not tell subscribers that he had accepted shares of common stock from a company in exchange for a positive recommendation to buy the shares, the SEC said.
A spokesman for the
office would not confirm or deny the existence of a criminal investigation.
A spokesperson for Park's Web site said Park was traveling on Wednesday and could not be reached for comment.
Park originally built up his reputation as a successful stock picker on Internet message boards and Web sites. In July 1998, Park started TokyoJoe.com, charging $299 a year to become a member of the Web site.
Over time he raised his fees to as much as $200 a month for his exclusive emails of his daily stock picks and access to his interactive chat room.
Between July 1998 and May 1999, Societe Anonyme's membership grew from about 200 to 3,800. Over that period of time, the SEC said Park collected more than $1.1 million in fees from members.
The case against Park, who is known to have a loyal following, underscores the potential landmine the Internet poses as a vehicle for investor fraud.
"The Internet has witnessed the rapid growth of Web sites run by self-proclaimed investment gurus," Richard Walker, the SEC's enforcement director, said in a statement.
"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," he added.
In fiscal year 2000, Congress awarded an additional $7 million to the SEC to help the regulatory body step up its Internet supervision. The SEC has prosecuted a number of cases of Internet-based fraud, including fraudulent share offerings as well as so-called pump-and-dump schemes, in which promoters push up stock prices with false information and then sell off the shares when the buying begins.
The SEC filed its complaint in the U.S. District Court for the Northern District of Illinois.