Updated from 4:46 p.m. EST

Paper billionaire Ralph Bartel is looking to cash in some of his hefty stake in

Travelzoo

(TZOO) - Get Report

, the online travel Web site he founded and which happens to be the hottest stock of the year.

Late Wednesday, Bartel, who owns 85% of Travelzoo's stock, filed a registration statement to sell 750,000 shares, or roughly 4% of the 15.6 million shares he owns. Based on Travelzoo's closing price of $87.72, Bartel's planned sale would net him $65.8 million.

Along with Bartel, the company's primary investment banker,

Wedbush Morgan

, is registering 30,000 shares that it had previously obtained from Bartel in an October 2003 agreement. Last month, Bartel exercised options to transfer the shares to Wedbush Morgan.

The timing of Bartel's planned sale of stock is curious, however.

In October, the 38-year-old former advertising executive announced a plan to sell 750,000 shares. But he changed his mind after a group of hedge funds that invested in a $30 million private placement objected. The hedge fund investors had asked Bartel to delay selling any large block of stock until the

Securities and Exchange Commission

approves their application to sell another 750,000 shares.

As of early today, sources say the SEC had not yet approved the registration statement filed by Travelzoo on behalf of the hedge fund investors in the so-called PIPE, or private investment in public equity, investment.

One of the larger investors in the PIPE is E*Capital Corp., a principal shareholder in Wedbush Morgan.

Kelly Ford, Travelzoo's investor relations director, says the registration statement covering resale of stock in the PIPE deal is not yet effective. He says Bartel's filing of the registration statement will enable him to sell shares no sooner than 15 days after the SEC approves the PIPE deal.

At the same time, it's no surprise that Bartel would want to cash in on the success of Travelzoo's stock, which is up nearly 1,000% on the year. The stock's astronomical gains have been fueled by a a combination of renewed interest in Internet companies, momentum trading and a float of just 2 million shares that makes the stock prone to immense volatility.

Short-sellers contend that the runup in the stock can't be justified, given the fact that Travelzoo is facing increased competition in the online travel sector and has a little over $23 million in advertising revenue.

In reviewing the registration statement for the PIPE deal, the SEC has raised a number of questions about the company's past regulatory filings. The regulators have asked the company to name its two biggest customers, who account for one-fifth of its revenue.

The SEC also wants Travelzoo to explain how it will account for payments to stockholders who received some 5 million shares in a 1998 promotional giveaway. Earlier this year, Travelzoo's board declared 4.1 million of those free shares invalid because the stockholders had not exchanged them for new shares after a corporate reorganization. It reduced its outstanding share count to 15 million from 19 million.

In October, the board backpedaled, offering cash to former stockholders who can prove they had received free shares and weren't aware of the exchange.

With Travelzoo's stock trading between $85 and $100 a share, the company could face a substantial payout if all the former shareholders came forward with a valid demand. To date, the company has set aside just $220,000 to reimburse its former shareholders.

The SEC has asked the company to account for the program and "address the timing, measurement and classification of amounts you expect to record within your financial statements."

In an amended registration statement for the PIPE offering, which was filed last week, Travelzoo did not address the issue of the share giveaway or the identity of its two main customers.