SEC SENDS SALES PRACTICES MESSAGE TO INDUSTRY
OLDE PART 1

On September 10, 1998, the Securities and Exchange Commission (SEC) issued an Order Instituting Public Administrative Proceedings In The Matter Of Olde Discount Corp., Ernest J. Olde, Stanley A. Snider, And Daniel D. Katzman, 33-7577, 34-40423, Admin. Proc. 3-9699 in which it was determined that:

• Olde Discount Corp. (Olde) willfully violated Section 17(a) of the Securities Act and Sections 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder;
• Snider and Katzman willfully induced certain violations of such antifraud provisions, and were each a cause of certain of Olde’s violations; and
• Ernest J. Olde (E.J. Olde) failed reasonably to supervise with a view of preventing violations of such antifraud provisions, and was a cause of Olde's violations.

The Respondents submitted Offers of Settlement, which the SEC accepted and subsequently ordered the following sanctions:

• Censured
• cease and desist from committing or causing any violations and any future violation of specified sections and rules of the securities laws
• a civil penalty in the amount of $4 million
• Olde comply with its undertakings, some of which require it to

1. retain within thirty (30) days of the date of the Order, at Olde's expense, an Independent Consultant (Consultant) who shall, among other things:

• conduct a comprehensive review of Olde's policies and procedures with respect to:

1. the compensation of RRs, branch managers, district managers and regional managers, including but not limited to, the manner in which the firm communicates the existence and amount of sales credits, if any, to RRs;
2. the imposition of product specific sales quotas;
3. practices used to sell securities to customers;
4. the hiring and training of employees, including but not limited to:

• whether to extend the period of training for inexperienced RRs; and
• whether to broaden the program of continuing education for RRs and managers;

1. the compliance systems and procedures for the supervision of RRs, branch managers, district managers and regional managers;
2. whether branch managers, district managers and regional managers must meet the same production quotas as RRs;
3. whether customers must effect transactions in particular types of securities within a specified time period; and
4. whether to disclose to customers different RR compensation schedules, if any, used for transactions in securities from different product families;

• recommend such other policies or as are necessary and appropriate reasonably to prevent and detect violations of the federal securities laws; and
• prepare written reports to be provided to the SEC.

2. adopt and implement, no later than sixty (60) days after receipt of the report (or such other time as the Consultant believes is necessary), at Olde's expense, such policies and procedures as recommended by the Consultant;

3. retain, at Olde's expense, for a period of at least five (5) yearsafter the effective date of this Order, an Independent Review Person ("Review Person") to review Olde's compliance practices and to ensure implementation of the Consultant's recommendations.

4. waive applicable statutes of limitation defenses in any arbitration proceeding filed within 180 days after the date of the Order by a present or former Olde customer who purchased a "special venture" security from September 1, 1992 to August 31, 1995, and claimed that his or her account was churned or subjected to unauthorized or unsuitable trading or that an Olde employee misrepresented or omitted to state a material fact concerning the "special venture" security, the use of margin, or the compensation or revenue anticipated or derived by Olde and its RRs .