Tokyo Joe suit starts the legal ball rolling

2000-01-07

“Moments of glory, desires, wealth, in the end all an illusion.” So proclaims the home page of Tokyo Joe, the darling of the Internet stock market. With four separate charges of fraud currently being filed against him, it would appear that the online stock guru is being hauled back to reality.

Amongst other things, the Securities and Exchange Commission (SEC) has accused Tokyo Joe of “scalping”. According to the SEC, TJ took advantage of his influential position to talk up the price of stocks, and he encouraged others to buy whilst selling his own share holdings. In addition he is said to have kept his own trading activities secret from his own clients and lied about his track record. Damaging charges indeed.

Whilst it is unclear whether the Tokyo Joe is in fact guilty as charged, or indeed whether the charges can be made to stick, this case serves as a landmark for the currently under-regulated area of Internet stock trading. As this case indicates, the legal issues surrounding dealing in eStocks are still very much on the drawing board. This is acknowledged by TJ’s lawyer who claims that his client had “legitimately taken advantage of legislative loopholes," according to The Independent. Hence why it is a good thing that the SEC has launched this, its first suit concerning Internet stock trading. Much of legal activity relies on precedent: while it is unclear what the outcome of this particular case will be, its results will provide at least a small stepping stone to future cases.

The Internet has left the law at a standing start. Its positively anarchistic nature can be said to have driven innovation in Web time, not to mention a potential new world of global free speech. Despite this, an appropriate legal framework is necessary to counter against the inevitable abuses of the system and its users. All in all, by raising the suit against Tokyo Joe, the SEC have taken an important step.

(First published 7 January 2000)