UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that a public administrative proceeding pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") be instituted against Respondents Edward R. Cox ("Cox") and Cox Securities, Inc. ("Cox Securities").
In anticipation of the institution of this administrative proceeding, Cox and Cox Securities have submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party and prior to a hearing and without admitting or denying the findings contained herein, except that Cox and Cox Securities each admits the jurisdiction of the Commission over each of them and over the subject matter of this proceeding and the entry of a Final Judgment of Permanent Injunction and Other Relief Against Edward R. Cox and Cox Securities, Inc. as set forth in section III. paragraph C., Cox and Cox Securities each consent to the entry of this Order Instituting Public Administrative Proceeding, Making Findings and Imposing Remedial Sanctions ("Order") set forth below.
Accordingly, IT IS ORDERED that a proceeding pursuant to Sections 15(b) and 19(h) of the Exchange Act be, and hereby is, instituted.
On the basis of this Order and the Offer submitted by Cox and Cox Securities, the Commission finds that:
A.Cox, age 51, resides in Orange, California and is president and sole shareholder of Cox Securities and the lessee member of the Pacific Exchange ("PCX"). Cox worked as an equities floor broker at the PCX from approximately August 1, 1977 to March 12, 1998.
B.Cox Securities is a California corporation incorporated on October 2, 1991, and has been registered as a broker-dealer with the Commission since November 18, 1991 (File No. 8-44263) and, at all relevant times, was a member firm of the PCX based on the equities trading floor of the PCX in Los Angeles, California. Cox Securities operated as an equities floor broker servicing institutional clients and in 1997 was the top trade producing equities floor broker at the PCX, averaging 2,300 trades and 10 million shares per month.
C. A Final Judgment of Permanent Injunction and Other Relief Against Edward R. Cox and Cox Securities, Inc. (hereafter referred to as "the Judgment") was entered in the United States District Court for the Central District of California, Southern Division, against Cox and Cox Securities, on October 17, 2000. The Judgment permanently enjoined Cox and Cox Securities from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 17(a)(1) of the Exchange Act and Rules 10b-5 and 17a-3 thereunder. SEC v. Edward R. Cox and Cox Securities, Inc., Civil Action No. SAVC 99-1214 DOC (ANx).
D. The Commission's Complaint filed in the action described above alleges, among other things, that Cox operated Cox Securities as a broker-dealer on the PCX equities floor, in Los Angeles, California, from approximately November 1991 to March 12, 1998, when Cox and Cox Securities were suspended by the PCX. The Complaint further alleges that from at least November 1996 through March 12, 1998, Cox and Cox Securities created over a thousand false trade corrections to move trading losses back and forth from one broker-dealer or floor specialist to another. These false trade corrections involved at least 31 different securities and resulted in $1,540,080.50 in losses.
Based on the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to accept the Offer submitted by Cox and Cox Securities and impose the sanctions specified in the Offer.
Accordingly, IT IS HEREBY ORDERED that:
A. Edward R. Cox be, and hereby is, barred from association with any broker or dealer; and
B. the broker-dealer registration of Cox Securities, Inc. be and hereby is, revoked.By the Commission.
Jonathan G. Katz