U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. LR 17591 / June 27, 2002

   Securities and Exchange Commission v. Gregory P. Waldon, No.
   CIV-02-1395 (E.D. California)

   SEC CHARGES CALIFORNIA BROKER WITH FRAUD IN VARIABLE ANNUITY SALES

   In only the second Securities and Exchange Commission action for
   fraudulent variable annuity switching, the SEC today announced the
   filing yesterday of civil fraud charges against Gregory P. Waldon of
   Redding, California. The suit alleges that Waldon defrauded scores of
   retired customers by recommending that they replace existing
   investments in variable annuities with new investments in similar
   variable annuities, knowing that the switches would be harmful to his
   customers but would enable him to receive significant commissions. The
   complaint alleges that Waldon recommended approximately 57 such
   switches between January 1998 and November 2001. Waldon's customers
   either received no economic benefit or lost money in the switch
   transactions and together incurred more than $200,000 in needless
   transaction costs, while Waldon received approximately $275,000 in
   commissions for the unsuitable switches.

   Variable annuities are considered long-term investments that offer
   customers various investment options typically similar to mutual
   funds; however, variable annuities are taxed differently, have
   insurance-related features, and charge different costs. Waldon is a
   former registered representative of Commission-registered
   broker-dealers through which he sold variable annuities, including
   FASCO International, Inc., formerly of Chico, California. Most of
   Waldon's customers live in Northern California or Oregon.

   According to the filings, Waldon further defrauded his customers by
   misrepresenting the effects or the benefits of switching, and by
   failing to disclose to certain customers the costs and risks of
   switching. The complaint alleges that Waldon told certain customers
   that they needed to switch to a new variable annuity from their
   original variable annuity in order to stem investment losses caused by
   declines in the stock market during 2000 and 2001, even though
   switching did not halt their losses and the customers could have
   achieved their objective, without incurring switching costs, by simply
   electing another investment option within their original variable
   annuity. Waldon was aware that most of his customers did not have
   significant investment experience, particularly regarding variable
   annuities, and relied upon him when making the decision to switch.

   In the civil complaint filed in United States District Court for the