AmplifiedVolatility 57They then spent the weekend on computers at UCLA bombarding
three popular finance message boards—Yahoo!, Raging Bull, and
Freerealtime—with some five hundred fabricated messages hyping a
pending buyout of the worthless company. The lies jacked up NEI’s
stoc kprice to open at $8 Monday morning and move to a high that
day of $15, while the troika cashed in their shares for a net booty of
about $364,000, plunging the price bac kto the nic kels and dimes
they had “invested.”^12
The SEC and the U.S. attorney’s office in California jumped on
this scam and in a matter of days identified the looters and charged
them with violating federal securities laws against telling material
lies in connection with the purchase or sale of securities. The SEC
rightly denounced much of the nonsense that is spewed in Internet
bulletin boards and chat rooms as having no more value than graffiti,
andThe Wall Street Journalrightly declared that some of them can
be worse than trash.
Of all the known Internet trashers, Yun Soo Oh Park is the most
notorious. Called Tokyo Joe, he was subjected to civil fraud charges
in early 2000 by the SEC for putting misleading investment infor-
mation on his Internet site. During 1998 and 1999, the SEC said,
Tokyo Joe made hundreds of thousands of fraudulent dollars through
a scalping strategy that involved buying stocks, saying wonderful
things about them on his Web site, and then selling them after the
buying of the masses pushed their price up.^13
It may not even be those looking for fast money who sponsor
this negative information volatility. Early in 1999 an employee of
PairGain Technologies put a message on a Yahoo! site directing users
to a fake Bloomberg News page containing a fabricated story that
PairGain was going to be taken over. Its stock price soared on this
“news,” and while the fabricator apparently did not gain any money
from the ploy, he is spending five years on probation for the crime.^14
Hard as it is to identify Internet scammers, you cannot count on
the authorities to punish and deter the new defrauders when they
are traced. When the SEC discovered in early 2000 that four third-
year Georgetown University law students (and the mother of one of
them, who happened to be a councilwoman for Colorado Springs!)
had generated nearly $350,000 in illegal profits from a pump-and-
dump scam on their Web site, the SEC “settled” with the scoundrels.
No jail time, no fine, not even disgorgement of the dirty money. The
losers simply had to agree not to do it again.^15
In a world where it is just as easy for anyone to buy a share of