Internet stock pundit “Tokyo Joe” Park said Thursday that he had agreed to pay $750,000 in a tentative settlement of Securities and Exchange Commission fraud charges.
“It’s time to move on,” said Park, whose real name is Yun Soo Oh Park, in an interview by telephone from his Manhattan apartment. “Lawyers have made enough money off of me. I and other Internet traders learned a valuable lesson, which is to make full disclosure.”
Tokyo Joe, one of the best-known stock pickers on the Web, said he agreed to the settlement with SEC staff. Under the settlement, which still must be approved by SEC commissioners, he would neither admit nor deny any wrongdoing, Park said.
The SEC had sought as much as $2.25 million, the Wall Street Journal reported Wednesday.
“This is a fairly weak, or equivocal, settlement by the SEC,” said Columbia University law professor John Coffee. “It’s not a resounding victory for them.”
The SEC sued Park in January 2000, alleging that he urged investors to buy five stocks without disclosing that he owned the securities and that he planned to sell them.
The suit, filed in federal court in Chicago, also alleged that Park failed to disclose that he was paid 100,000 shares by DCGR International Holdings, a cigar maker, to promote its stock.
The commission also accused Park of exaggerating his investing performance by as much as 2,000% on at least 30 stocks.
Park, 50, said the SEC settlement will focus on disclosures he failed to make before starting his TokyoJoe.com Web site in June 1998. At the time, he posted stock picks on the Silicon Investor message board and Raging Bull.com Web site.
“I was amateurish at the time,” Park said Wednesday. “We have airtight disclosure now.”
Park, whose blunt, rapid-fire trading advice won him a wide following on the Web, has a subscription-based e-mail club called Societe Anonyme with 600 members who pay $200 a month, he said. His membership was almost 4,000 last year before he doubled the $100 subscription price amid a falling market.
SEC enforcement director Richard Walker said last year that he wanted to use the Tokyo Joe charges as a “test case” to secure a court judgment that would toughen standards for dozens of Internet stock pickers.
The suit sought to extend the SEC’s authority to prosecute Internet stock pickers for possible fraud. It contended Tokyo Joe is an advisor who should be subject to the same fraud rules as the 24,000 investment-advisor firms in the U.S.
The SEC won a preliminary court victory over Tokyo Joe in May when a federal judge rejected the Web pundit’s motion to dismiss the case. “This is a precedent we can use in other matters,” Walker said Wednesday. “Tokyo Joe’s challenges to the commission’s theories were soundly rejected by the court.”
But Coffee said the Tokyo Joe settlement shows that “the SEC didn’t want to go to court to explain its dangerous investment-advisor theory,” which some experts said violated free-speech rights.
The SEC failed to achieve the legal standard it sought that would have regarded a subscription-based Web stock site as an unregistered investment advisor, Coffee said.