Litigation Release No. 19774 / July 26, 2006

SEC v. Michael L. Hershey, Robert D. Lear, Landis Associates, LLC, and Tremont Medical, Inc., Civil Action No. 04-CV-2742-JPF (E.D. Pa.)

Commission Settles Civil Action Against Landis Associates, LLC, Michael L. Hershey, and Robert D. Lear Arising From Allegations of Fraud and Misuse of Client Funds

Settling Defendants to Pay Penalties of $295,000, which will be Distributed to Victim; Hershey Barred from Association with any Investment Adviser.

The Commission announced that it has settled its previously filed civil action against Landis Associates, LLC ("Landis"), formerly a registered investment adviser located in Kennett Square, PA; its principal, Michael L. Hershey ("Hershey"), formerly of Kennett Square, PA; and Robert D. Lear ("Lear"), who resides in Warrington, PA and is the former Chief Financial Officer of Tremont Medical, Inc. ("Tremont Medical"), a medical technology company, located in Aston, PA. The remaining defendant, Tremont Medical, is no longer doing business and, by all indications, is defunct; therefore, the Commission has dismissed the civil action as to this defendant.

Without admitting or denying the allegations in the complaint, Landis, Hershey, and Lear have consented to the entry of Final Judgment against them permanently enjoining each from further violations of Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; Sections 204, 206(1), and 206(2) of the Investment Advisers Act of 1940, and Rules 204-2(a)(3) and (7) thereunder. In addition, Landis has agreed to pay a civil penalty of $150,000, plus $1 disgorgement; Hershey has agreed to pay a civil penalty of $100,000, plus $1 disgorgement; and Lear has agreed to pay a civil penalty of $45,000, plus $1 disgorgement, all of which funds will be paid directly to the victim of the charged conduct. The Final Judgments against Landis, Hershey and Lear, as well as the dismissal of Tremont Medical, were entered on July 19, 2006.

The Securities and Exchange Commission also announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Hershey, based on the entry of the permanent injunction. Hershey has consented to the sanctions imposed without admitting or denying the findings contained therein, except those findings specifically identified in the Order. The Commission's Order bars Hershey from association with any investment adviser. Landis, formerly a registered investment adviser, during the pendency of the court proceedings and settlement negotiations, had voluntarily withdrawn its investment adviser registration.

The Commission's complaint, filed June 22, 2004, in the United States District Court for the Eastern District of Pennsylvania, alleged that Hershey, individually and through Landis Associates, misused client funds and breached his fiduciary duty to a wealthy client (the Defrauded Client) by investing in Tremont Medical, a privately held "start up" company, of which Hershey was a director and shareholder. Hershey continued to make these investments long after it was clear that the Defrauded Client's account was Tremont's only source of capital and that these investments were worthless.

The complaint charged that Hershey, acting through Landis, and with the assistance and participation of Lear, concealed the true nature of these transactions. The resulting decline in value of the Defrauded Client's account, the complaint alleged, was further concealed when Hershey, through Landis, sent the Defrauded Client false monthly advisory statements. As a result, the Commission alleged, the Defrauded Client's managed account was overvalued by more than $30 million. The complaint alleged that, by the time that the Defrauded Client's account with Landis and Hershey was closed in June 2001, the account had lost nearly 70% of its value and the Defrauded Client had lost all of the money that Hershey invested in Tremont.

Administrative Proceeding No. IA-2538