SECURITIES AND EXCHANGE COMMISSION

   Litigation Release No 16356 / November 17, 1999

   SEC v. PATRICK H. MCCARTHY, Civil Action No. 1-99-CV-2003 (U.S.
   District Court for the Middle District of Pennsylvania)(YK)

   SEC FILES FRAUD ACTION AGAINST SENIOR ADVISER TO FORMER PENNSYLVANIA
   STATE TREASURER IN CONNECTION WITH STATE BOND OFFERINGS

   The Securities and Exchange Commission today filed a complaint for
   securities fraud against Patrick H. McCarthy, a Philadelphia attorney
   and former fund raiser and senior adviser to the past Treasurer of the
   Commonwealth of Pennsylvania. The complaint charges McCarthy with
   arranging for his law firm to receive undisclosed compensation, in
   violation of his fiduciary duty, for influencing the selection of a
   securities dealer in two Pennsylvania refunding bond offerings in
   1994.

   In a refunding bond offering, an issuer gets the benefit of lower
   current interest rates on its debt by issuing "refunding bonds" and
   immediately investing the proceeds in a portfolio of U.S. Treasury or
   agency securities structured to pay the principal and interest on old,
   higher interest rate bonds. The Commission's complaint alleges that,
   although not a Commonwealth employee, McCarthy was viewed by senior
   staff as the most powerful person in the Pennsylvania Treasurer's
   office, after the Treasurer and the Executive Deputy Treasurer, at the
   time of the 1994 refunding bond offerings. Dennis E. Thiemann, then a
   longtime consultant to Arthurs Lestrange & Company, a Pittsburgh-based
   broker-dealer which served as the Commonwealth's financial adviser for
   the offerings, obtained Arthurs Lestrange's agreement that the firm
   would pay Thiemann one-third of its deal revenues if Thiemann could
   find a larger broker-dealer which would agree to sell the Treasury
   securities to the Commonwealth, split its fees with Arthurs Lestrange,
   and pay 60 percent of the total to Arthurs Lestrange. Thiemann then
   approached his friend, John M. Seidman, who ran a private consulting
   firm called JMS Associates, and whom Thiemann believed had contacts
   within the Treasurer's office. Seidman and Thiemann discussed several
   firms, including Alex. Brown and Sons Incorporated, which Seidman knew
   was the financial adviser to the Treasurer's office. Seidman also was
   a friend of McCarthy, and knew that McCarthy had a long-standing
   relationship with Alex. Brown's municipal securities business.
   McCarthy was then approached for his assistance in arranging for Alex.
   Brown to be appointed to sell the Treasury securities.

   The complaint alleges that McCarthy then contacted Alex. Brown and
   offered that Alex. Brown could be appointed to sell the Treasury
   securities if it would split fees with Arthurs Lestrange, and pay