==========================================START OF PAGE 1====== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. SECURITIES AND EXCHANGE COMMISSION v. HEALTHCARE SERVICES GROUP, INC., DANIEL P. MCCARTNEY, THOMAS A. COOK AND MELVYN B. MASON, Civil Action No. 96cv-6464 (E.D. Pa.). Litigation Release No. 15124 / October 16, 1996. Accounting and Auditing Enforcement Release No. 842 / October 16, 1996. The U.S. Securities and Exchange Commission announced today that on October 15, 1996, the Honorable Eduardo C. Robreno, judge of the U.S. District Court for the Eastern District of Pennsylvania, entered Orders in the matter of SEC v. Healthcare Services Group, et al., consented to by all defendants, without admitting or denying the allegations in the Commission's complaint, resolving all matters raised in that litigation. Pursuant to the Orders: (i) Healthcare Services Group, Inc. ("HSG"), is permanently enjoined from future violations of Sec- tion 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder, and is required to pay a civil penalty in the amount of $650,000; (ii) HSG chief executive officer and chairman-of-the-board Daniel P. McCartney is permanently enjoined from future violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13 thereunder, and is required to pay a civil penalty in the amount of $100,000; (iii) HSG president Thomas A. Cook is permanently enjoined from future violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13 thereunder, and is required to pay a civil penalty in the amount of $50,000; and (iv) former HSG vice-president Melvyn B. Mason is permanently enjoined from future violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, is required to pay a civil penalty in the amount of $50,000, and is prohibited, pursuant to Section 21(d)(2) of the Exchange Act, from serving as an officer or director of any public company for a period of 7 years. HSG, headquartered in Huntingdon Valley, Pennsylvania, supplies housekeeping, laundry and linen services to healthcare facilities. HSG's common stock is quoted on the National Association of Securities Dealers' Automated Quotation System. In its complaint, filed on September 24, 1996, the Commission alleged that HSG, McCartney and Cook violated the anti-fraud provisions of the federal securities laws by failing to disclose, in connection with a July 1990 $22 million public offering, that a substantial number of HSG's customers presented a material risk of cancelling their contracts with HSG. The complaint further alleged that HSG's financial statements during calendar years 1990 and 1991, as incorporated in Commission reports, were materially false and misleading. The complaint also alleged that HSG and Mason violated the anti-fraud provisions by failing to disclose that, between 1988 and 1991, HSG made over $400,000 in payments to certain third parties for no valid business purpose. See Litigation Release No. 15068/ September 25, 1996; Accounting and Auditing Enforcement Release No. 823/ September 25, 1996.