- 1 - UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 15707 / April 15, 1998 Securities and Exchange Commission v. Jerome M. Wenger, 98 Civ. 2674 (MM)(S.D.N.Y.) The Commission filed a Complaint today in the United States District Court for the Southern District of New York alleging that, between June 1997 and September 1997 (the "Relevant Period"), a radio talk show host promoted the stock of a company on his radio program without disclosing that he was being paid by the company to do so. Named in the Commission's Complaint is: Jerome M. Wenger ("Wenger"), age 52, of Bethesda, Maryland. Wenger hosts The Next SuperStock radio program, which is broadcast on over ten radio stations nationwide, including, New York, Chicago, Boca Raton, Boston, Phoenix, Seattle and Washington, D.C. Wenger also publishes a newsletter and maintains an Internet Web Site, both of which also use the name The Next SuperStock. The Complaint alleges that, during June 1997, Wenger made a proposal to Transco Research Corporation ("Transco"), a Delaware corporation that distributes pre-paid telephone cards and cellular telephones. Specifically, Wenger allegedly offered to describe and promote sales of Transco stock on broadcasts of The Next SuperStock radio program in exchange for shares of Transco common stock. According to the Complaint, Transco agreed to pay Wenger consideration in exchange for Wenger's promotion of Transco stock. Accordingly, Transco allegedly paid Wenger consideration that included: (a) 44,000 shares of Transco common stock, which Transco tendered to Wenger on June 12, 1997; (b) 15,000 shares of Transco stock, which Transco tendered to Wenger on September 30, 1997; and (c) a check for $4,000, which Transco tendered to Wenger on August 5, 1997. The Complaint alleges that Wenger realized approximately $71,000 from the sale of these 59,000 shares of Transco stock. Wenger allegedly featured Transco on The Next SuperStock and an affiliated radio program approximately 40 times, during the Relevant Period. According to the Complaint, during certain of these broadcasts, including, but not limited to, broadcasts on radio station WEVD A.M. in New York City on June 25, 1997 and June 26, 1997, Wenger interviewed a representative of Transco, described Transco's business, discussed Transco's product lines, commended Transco's proposed business plans, and provided listeners with a toll free number to call for more information about Transco stock. This toll free number allegedly was the telephone number of an individual who held himself out as "Tom Richardson," a purported registered representative of Wise Choice Discount Brokerage, Inc., a broker-dealer registered with the Commission. According to the Complaint, Wenger failed to disclose during The Next SuperStock radio programs, including, but not limited to, the broadcasts on radio station WEVD A.M. in New York City on June 25, 1997 and June 26, 1997: (a) that he entered into an agreement with Transco to promote Transco's stock on the radio program; (b) that he received consideration from Transco to promote Transco's stock; (c) the amount of the consideration he received from Transco; (d) the value of the consideration he received from Transco; (e) that the consideration he received was Transco stock and cash; or (f) that he expected to receive additional consideration from Transco. By engaging in the foregoing conduct, the Commission alleges that Wenger violated Section 17(b) of the Securities Act of 1933 ("Securities Act"), which makes it unlawful to receive consideration from an issuer in exchange for publishing or circulating any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which describes an issuer's securities, without disclosing the nature and amount of the consideration received from the issuer. In its Complaint, the Commission seeks a final judgment permanently enjoining Wenger from violating Section 17(b) of the Securities Act, and ordering him to disgorge his ill-gotten gains, plus prejudgment interest, and to pay civil penalties. The litigation is pending. Wenger also is a defendant in SEC v. PanWorld Minerals International, Inc. et al., Civil No. 2:97 CV 0425B (D. Utah), a pending action that the Commission filed in June 1997 in the United States District Court for the District of Utah. In that action, the Commission alleges that, among other things, Wenger fraudulently touted and solicited investors to purchase stock of PanWorld Minerals International, Inc. ("PanWorld"), a Nevada corporation, while failing to disclose the receipt of PanWorld shares and the sales of those shares. Additionally, in 1984, Wenger, without admitting or denying the findings, consented to a Commission administrative order finding that he violated the antifraud provisions of the Securities Act, the Securities Exchange Act of 1934 and other provisions of the federal securities laws by, among other things, failing to disclose securities trading and conflicts of interest prior to making recommendations to investors. For more information see Litigation Release No. 15380 (June 2, 1997) - 1 -