U. S. SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 18103 / April 24, 2003

   COMMISSION FILES EMERGENCY ACTION AGAINST 1^ST ATLANTIC GUARANTY
   CORPORATION

, Civil Action No. 03-CV-1213 DKC (D. Md.)

   The Securities and Exchange Commission ("Commission") announced that,
   on April 23, 2003, it filed an emergency civil action in the United
   States District Court for the District of Maryland, against defendant
   1st Atlantic Guaranty Corporation ("1st Atlantic"), of Bethesda,
   Maryland. 1st Atlantic is a face-amount certificate company registered
   with the Commission pursuant to the Investment Company Act of 1940. A
   face-amount certificate company is a specialized type of investment
   company that issues fixed-income debt securities, agreeing to pay the
   principal amount of the instruments plus accrued interest on maturity.

   The Honorable Catherine C. Blake, upon motion of the Commission,
   entered emergency relief, including a temporary restraining order and
   freeze of payments to certificate holders, against the defendant, and
   scheduled a hearing on the Commission's motion for appointment of a
   receiver for May 5, 2003, with a preliminary injunction hearing to be
   scheduled thereafter.

   The Commission's complaint charges 1st Atlantic with violating
   Sections 28(a) and 28(b) of the Investment Company Act, and seeks
   permanent injunctive relief. The complaint alleges that, from at least
   September 2001 to the present, as a result of the transfer of certain
   assets previously held by it, 1st Atlantic has been and is operating
   with reserves well below the legal minimum required by the Investment
   Company Act. Between 1998 and 2002, the former chief executive officer
   and chairman of 1st Atlantic diverted approximately $1 million from
   1st Atlantic and transferred assets with a value of more than $2.8
   million to a subsidiary without consideration.

   The complaint further alleges that, in an attempt to cover its reserve
   deficiency, in September 2001, 1st Atlantic began to improperly count
   the value of the common stock of its subsidiary, State Bond and
   Mortgage Company, LLC ("State Bond") as a "qualified investment."
   However, the stock of State Bond is not a qualified investment, as
   defined under the Investment Company Act and, therefore, cannot be
   counted by 1st Atlantic towards its reserve requirement. Without that
   asset, 1st Atlantic has qualified investments of only $450,000 to pay
   certificate liabilities of more than $4 million and is operating in
   violation of the reserve requirements. Under the terms of the
   certificates, holders are entitled to demand immediate redemption