U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16777 / October 20, 2000
Securities and Exchange Commission v. Edward R. Cox and Cox Securities, Inc., Civil Action No. SA CV 99-1214 DOC (ANx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission") announced that the United States District Court for the Central District of California has entered Final Judgments of Permanent Injunction against defendants Edward R. Cox ("Cox") and his company Cox Securities, Inc. ("Cox Securities") on October 17, 2000. The Final Judgments permanently enjoin Cox and Cox Securities from future violations of the antifraud provisions of the federal securities laws. Cox was a floor broker on the Pacific Exchange where he executed securities trades for a broad institutional client base.
The Complaint alleges that from at least November 1996 through March 12, 1998, Cox created over a thousand false trades in which he moved trading losses to other Exchange members. Ultimately, this scheme involved at least 31 different securities, victimized at least 34 different broker-dealers and 19 floor specialists and resulted in over $1.5 million in losses. The Commission charged both defendants with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The Commission also charged Cox Securities with violating, and Cox with aiding and abetting violations of, the broker-dealer books and records requirements of Section 17(a)(1) of the Exchange Act and Rule 17a-3 thereunder.
Both defendants, without admitting or denying the allegations in the Complaint, consented to the entry of judgments enjoining them 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 and not assessing civil penalties based upon Cox and Cox Securities' demonstrated inability to pay. In addition, the Commission settled an administrative proceeding whereby Cox and Cox Securities, without admitting or denying the Commission's findings, consented to an Order barring Cox from association with any broker or dealer and revoking Cox Securities' registration as a broker-dealer.
The Commission acknowledges the assistance by the Pacific Exchange in connection with this matter.