SACRAMENTO, Calif. _ Financial regulators fined Republican gubernatorial candidate John Cox and his company $15,000 in 2004 for mishandling investors' funds in a housing deal, according to records filed with the Securities and Exchange Commission.
Along with the fine, which was first reported by The Sacramento Bee, Cox was also censured by the National Association of Securities Dealers, which regulates the securities industry. The agency is now known as the Financial Industry Regulatory Authority.
Records show that Cox did not admit to or deny the allegations at the time. He was fined $2,500 and his company, Financial Equity Associates, was fined $12,500.
"These clerical errors are almost 30 years old _ when John's business was a tiny fraction of what it is now _ and as shown involved no client losses or complaints at all," Cox campaign spokesman Matt Shupe said in a statement released on Wednesday. "They were simply technical violations of rules designed for broker dealers that are much larger than his company was, and that have whole compliance departments dedicated to complying with these rules."
The incident in question stemmed from an investment in a housing unit partnership. Cox's primary source of income comes from managing apartment buildings and condominiums.
Cox had promised to return the investors' money if a certain number of units in the project were not sold, according to SEC records. The regulators stated that Cox failed to put the investor's money in a separate reserve bank account or promptly return the funds when the number of housing units sold did not reach the target.
In 1990, Cox was also fined $1,000 by the same regulators in another investment deal.
Last week, the Los Angeles Times reported that Cox was accused of financial misconduct in a 1998 lawsuit filed by family members who owned the well-known Chicago potato chip company, Jays Foods. Cox paid a $1.7-million settlement.
