U.S. Securities and Exchange Commission

Litigation Release No. 18386 / October 2, 2003

, Civil Action No. LACV 03-7012 MMM (PJWx) (C.D. Cal.))

   The United States Securities and Exchange Commission ("Commission")
   filed a civil complaint this morning in United States District Court
   in Los Angeles charging Paul Joseph Sheehan ("Sheehan") with
   securities fraud and investment adviser fraud. Sheehan allegedly
   carried out a fraudulent "trade allocation" scheme known as
   "cherry-picking." Separately from the Commission's action, Sheehan was
   arrested this morning by FBI agents on a charge of investment advisory
   fraud.

   The Commission's action and the criminal case allege that Sheehan
   fraudulently allocated profitable securities trades to his own
   personal accounts at the expense of his clients' accounts. From at
   least April 1999 until September 2000, Sheehan "cherry-picked" at
   least $7.4 million in profitable day trades for himself and thereby
   stole economic opportunities that rightfully belonged to his clients.

   Sheehan, 64, of West Hollywood, an investment adviser formerly
   registered with the Commission, operated Paul J. Sheehan & Associates
   in West Hollywood until early 2003. Sheehan provided investment
   management services to individuals, pension and profit-sharing plans,
   trusts, estates, charitable organizations, and corporations.

   In the criminal complaint that was filed late yesterday, also in
   United States District Court in Los Angeles, Sheehan was charged with
   one count of fraud by an investment adviser. These charges carry a
   maximum penalty of 5 years imprisonment and a fine of $250,000.
   Sheehan is expected to make his initial court appearance this
   afternoon in federal court in Los Angeles.

   The Commission's civil complaint and the criminal complaint filed by
   the United States Attorney's Office allege that Sheehan implemented
   the fraudulent scheme by calling in trades to executing brokers
   without designating whether the trades were for his own personal
   accounts or the accounts of his clients. After the trades were
   executed, the shares or trade proceeds were allocated to an account at
   Salomon Smith Barney. Sheehan did not instruct Salomon Smith Barney to
   which particular client account or personal account the shares were to
   be allocated until the end of the trading day, by which time Sheehan
   knew whether or not a day trade had been profitable.

   According to an affidavit in support of the criminal complaint,
   Sheehan's scheme was detected by a Commission accountant during an