UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17366 / February 20, 2002

Accounting and Auditing Enforcement Release No. 1508 / February 20, 2002

Securities And Exchange Commission v. J. Donald Nichols, Jeb L. Hughes, and C. Sheldon Whittelsey, IV, United States District Court for the Northern District of Georgia, Civil Action No. 1:02-CV-478

The Securities and Exchange Commission announced that it filed a settled civil injunctive action on February 20, 2002, in United States District Court for the Northern District of Georgia, against J. Donald Nichols of Atlanta, GA, Jeb L. Hughes of Atlanta, GA, and C. Sheldon Whittelsey, IV of Marietta, GA.

The Commission's complaint alleges that the three defendants, all former officers of JDN Realty Corporation, a public company, arranged for cash and property to be transferred to Hughes and Whittelsey from third parties who sold real estate to JDN Realty. Nichols, Hughes, and Whittelsey failed to inform JDN Realty's accounting department of this compensation arrangement, and they also failed to disclose certain other related-party transactions. As a result, JDN Realty's public filings failed to disclose the executive officer compensation and related-party transactions, and by not properly accounting for the compensation, JDN Realty materially misstated its 1994 through 1997 annual financial statements and two quarterly financial statements in 1998.

Nichols, without admitting or denying the allegations in the Complaint, consented to the entry of a final judgment permanently enjoining him from future violations of Section 17(a) of the Securities Act; Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act; and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, 13b2-2, and 14a-9 thereunder. Nichols also agreed to pay a civil penalty of $110,000. Hughes and Whittelsey, without admitting or denying the allegations in the Complaint, consented to the entry of final judgments permanently enjoining them from future violations of Section 17(a) of the Securities Act; Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(5), and 14(a) of the Exchange Act; and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, and 14a-9 thereunder. Hughes and Whittelsey also agreed to pay civil penalties of $60,000 each and to be prohibited for a period of five (5) years from acting as an officer or director of any publicly traded company.