James Michael Cogley
SECURITIES EXCHANGE ACT OF 1934
Release No. 43135 / August 10, 2000
INVESTMENT ADVISERS ACT OF 1940
Release No. 1892 / August 10, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10267
In the Matter of
JAMES MICHAEL COGLEY,
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ORDER INSTITUTING PUBLIC PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS |
I.
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Respondent James Michael Cogley ("Cogley"), pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act").
II.
In anticipation of an Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions ("Order") being entered against him, Cogley has submitted an Offer of Settlement ("Offer") to the Commission, which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein, except for the Commission's findings contained in Paragraphs III(A) through III(C) below and the jurisdiction of the Commission over Cogley and over the subject matter of these proceedings, which are admitted, Cogley hereby consents to the entry of this Order.
Accordingly, it is ordered that proceedings pursuant to Section 15(b) of the Exchange Act and Section 203(f) of the Advisers Act be, and hereby are, instituted.
III.
On the basis of this Order and Respondent Cogley's Offer, the Commission makes the following findings:
A. In or about July 1994, Cogley worked for a broker-dealer registered with the Commission. From in or about August 1996 through January 2000, Cogley was registered, pursuant to Section 203(a) of the Advisers Act, with the Commission as an investment adviser operating as a sole proprietorship. On January 31, 2000, the Commission cancelled Cogley's registration as an investment adviser pursuant to Section 203(h) of the Advisers Act.
B. From in or about August 1997 through in or about August 1998, Cogley was not registered as a broker or dealer with the Commission pursuant to Section 15(a) of the Exchange Act. Cogley, through the Ohio Estate Group ("OEG"), an Ohio corporation controlled by Cogley, effected transactions in, induced or attempted to induce the purchase or sale of, securities in the form of promissory notes, at a time when Cogley was not registered with the Commission as a broker or dealer.
C. On November 29, 1999, Cogley was permanently enjoined, by consent, without admitting or denying the allegations contained in the Commission's complaint, from violating Sections 17(a)(1), (2) and (3) of the Securities Act of 1933 ("Securities Act"), [15 U.S.C. §77q(a)(1), (2) and (3)], Sections 10(b), 15(a)(1) and 15(c)(1) of the Exchange Act, [15 U.S.C. §78j(b), §78o(a)(1) and §78o(c)(1)], Rules 10b-5 and 15c1-2 [17 C.F.R. §240.10b-5 and §240.15c1-2] promulgated thereunder, and Sections 206(1) and 206(2) of the Advisers Act of 1940, as amended [15 U.S.C. §80b-6(1) and (2)]. (SEC v. James Michael Cogley and The Ohio Estate Group, Civil Action No. C2-98-802, S.D. Ohio, 1998).
D. The Commission's Complaint for Temporary Restraining Order, Preliminary and Permanent Injunction and Other Equitable Relief (the "Complaint") alleged that from in or about August 1997 through in or about August 1998, Cogley, while acting as an unregistered broker-dealer, offered and sold at least $2,400,000 worth of OEG promissory notes ("OEG Notes") to at least 44 investors. Cogley further recommended that investors sell their stock, transfer their Individual Retirement Account ("IRA") funds, and surrender cash in order to invest in the OEG Notes.
According to the Complaint, Cogley told investors and prospective investors that the money raised would be used for real estate and business development projects. Cogley solicited primarily elderly investors through mass mailings, implying the safety of the OEG Notes by claiming that the stock market was "too risky," that OEG Notes were an alternative to certificates of deposit and IRAs and that they were FDIC insured. Cogley signed each OEG Note on behalf OEG as the president and he personally guaranteed each OEG Note. The Complaint further alleged that Cogley promised investors and prospective investors interest rates ranging from 9.25% to 24%. The Complaint also alleged that Cogley failed to tell investors and prospective investors that, among other things: he had filed for personal bankruptcy in 1990 and received a discharge in bankruptcy on May 7, 1991; that the State of Ohio, Division of Securities, issued a cease and desist Order against him for soliciting and selling unregistered securities; and that both Cogley and OEG had negative net worths.
The Complaint further alleged that instead of investing funds in real estate and business development projects, Cogley used the majority of investor funds to pay for personal and business expenses and to pay previous OEG Note purchasers. Therefore, the Complaint alleged that Cogley, through OEG, made misrepresentations regarding the safety and return of the investment, Cogley's financial and disciplinary background, and the true use of proceeds.
IV.
In light of the foregoing, the Commission deems it appropriate and in the public interest to accept Cogley's Offer and impose the sanctions specified therein, and accordingly,
IT IS HEREBY ORDERED, effective immediately, that James Michael Cogley be, and hereby is, barred from association with any broker, dealer or investment adviser.
By the Commission.
Jonathan G. Katz
Secretary