SECURITIES AND EXCHANGE COMMISSION

   Litigation Release No. 16909 / February 28, 2001

   , (U.S.D.C. S.D. Ohio, Western Division at Cincinnati, Civil Action
   No. C-1-01-116, filed February 26, 2001).

   The Securities and Exchange Commission announced that on February 26,
   2001, the Honorable Judge Sandra S. Beckwith entered an Order of
   Permanent Injunction against Stephen G. Donahue ("Donahue"), a
   resident of Cincinnati, Ohio, and an Order of Preliminary Injunction
   against Donahue Securities Inc. ("DSI"), an Ohio corporation
   registered with the Commission as a broker-dealer since 1989. The
   Commission's Complaint, filed on February 26, 2001, alleged that
   Donahue, the former president of DSI, has confessed that since 1989,
   Donahue and DSI have engaged in a scheme to misappropriate at least $6
   million dollars from approximately 200 to 250 customers of DSI.

   The Commission's Complaint further alleged that Donahue and DSI
   represented to their clients that they would invest the clients' funds
   in a money market fund or a DSI tax free bond fund paying interest
   ranging from 5% to 6%. However, the Complaint alleged, that both funds
   did not exist and that instead of investing the clients' funds as
   promised, Donahue and DSI deposited the money into an account
   controlled personally by Donahue and used the money to pay business
   expenses for DSI and two additional companies owned at least in part
   by Donahue, SG Donahue & Company, Inc. and Donahue Mortgage Company.
   Finally, the Complaint alleged that Donahue also used client funds to
   pay personal expenses, including paying his personal taxes, making a
   down payment on and renovating a condominium in Florida, purchasing
   vacant land on which to build a home and purchasing building materials
   for the home.

   The Orders, entered pursuant to Donahue's and DSI's consents and
   without admitting or denying the allegations contained in the
   Commission's Complaint, permanently enjoin Donahue and preliminarily
   enjoin DSI from further violating Section 17(a) of the Securities Act
   of 1933, Sections 10(b) of the Securities Exchange Act of 1934 and
   Rule 10b-5 thereunder and from violating or aiding and abetting
   violations of Section 15(c) of the Exchange Act and Rule15c1-2
   thereunder. In addition, the Orders freeze all of Donahue's and DSI's
   assets, prohibit Donahue and DSI from destroying any documents, order
   Donahue and DSI to account for all of their ill-gotten gains and order
   Donahue to disgorge his ill-gotten gains and pay civil penalties in an
   amount to be determined in a separate hearing by the Court.
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Modified 03/01/2001