SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

LITIGATION RELEASE NO. 17280 / December 19, 2001

Securities and Exchange Commission v. Maria Iacovelli, Richard Morrisey, Individually, as Custodian for Chelsea Adair Morrisey, as Custodian for Eric Ryan Morrisey, and as Custodian for Andrew Jason Morrisey, Jerry Thornthwaite, and Marvin Kogod, Civil Action No. 1:01CV00344(GK) (D.D.C.)

GEORGIA ACCOUNTANT SETTLES SEC CHARGES OF INSIDER TRADING AND SELLING UNREGISTERED SYSTEMS OF EXCELLENCE SECURITIES

The Securities and Exchange Commission today announced that on December 14, 2001 the Honorable Gladys Kessler of the United States District Court for the District of Columbia entered a final judgment against Richard Morrisey, a Georgia accountant, permanently enjoining him from violations of the antifraud and registration provisions of the federal securities laws and requiring him to pay disgorgement and prejudgment interest. The Commission has now obtained settlements from all four defendants in this action.

The Commission's complaint, filed on February 15, 2001, charged that Morrisey, who performed in-house bookkeeping services for Systems of Excellence ("SOE") in 1995 and 1996, learned in detail certain aspects of the SOE fraud in August and September 1996. Thereafter, but before public disclosure had been made, Morrisey resold 95,000 SOE shares while in possession of material, non-public information, in violation of the antifraud provisions contained in Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5. Additionally, before learning of the fraud, Morrisey resold another 220,000 SOE shares in violation of the strict-liability registration provisions contained in Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"). In total, Morrisey realized illegal profits of $272,182 on the resale of these 315,000 shares.

Morrisey, without admitting or denying the SEC's allegations, consented to the entry of a court order that: (i) permanently enjoins him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 5(a) and (c) of the Securities Act; and (ii) requires him to disgorge $272,182 plus prejudgment interest of $132,540, provided that all shall be waived but for the payment of $35,100, prejudgment interest of $14,083, and the surrender of 200 shares of Texas Instruments stock to the Court-appointed receiver, and no penalties assessed based on his inability to pay.

On October 4, 1996, the Commission suspended trading in the securities of SOE for a ten-day period pursuant to Section 12(k) of the Exchange Act, in part, because of questions regarding the illegal distribution and resale of millions of unregistered SOE shares. Prior to the trading suspension, Morrisey had illegally resold 315,000 shares (of the 325,000 SOE shares he had acquired) into the manipulated market.

The Commission has filed nine separate enforcement actions resulting from this investigation, assisted in obtaining four criminal convictions, deregistered the securities of SOE, and recovered in excess of $15 million for defrauded SOE investors. The Court-appointed receiver will begin distributing these funds to victims of the SOE fraud in the coming months.

The Commission previously has made several announcements concerning these matters. See Lit. Rel. 16901 (February 15, 2001); Lit. Rel. 16881 (January 31, 2001); Lit. Rel. 16804 (November 20, 2000); Lit. Rel. 16695 (September 11, 2000); Lit. Rel. 16632a (July 21, 2000); Securities Exchange Act Rel. 42616 (April 4, 2000); Lit. Rel. 16343 (October 27, 1999); Lit. Rel. 15996 (December 9, 1998); Lit. Rel. 15906 (September 24, 1998); Lit. Rel. 15888 (September 18, 1998); Lit. Rel. 15617 (January 14, 1998); Lit. Rel. 15600 (December 22, 1997); Lit. Rel. 15571 (November 25, 1997); Lit. Rel. 15490 (September 12, 1997); Lit. Rel. 15286 (March 12, 1997); Lit. Rel. 15237 (January 31, 1997); Lit. Rel. 15185 (December 12, 1996); Lit. Rel. 15153 (November 7, 1996); Securities Exchange Act Rel. No. 37791 (October 7, 1996).

This enforcement action is part of the Commission's four-pronged approach to attacking Microcap abuses: enforcement, inspections, investor education and regulation. For information about the SEC's response to Microcap fraud, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/divisions/enforce/microcap.htm.