UNITED STATES SECURITIES AND EXCHANGE COMMISSION

     LITIGATION RELEASE NO. 15410 July 10, 1997

     SECURITIES AND EXCHANGE COMMISSION v. STUART GREGORY SMITH AND CAPITAL
     INVESTMENT MANAGERS, INC.
     497-CV 545-A, USDC, ND/TX (Fort Worth Division)

          The Securities and Exchange Commission ("Commission") announced that
     on July 7, 1997, it filed a complaint in United States District Court in
     Fort Worth, Texas, seeking a permanent injunction against Stuart Gregory
     Smith and Capital Investment Managers, Inc. ("CIMI"), a broker-dealer
     registered with the Commission.  In its complaint, the Commission alleges
     that, from July 1992 through October 1993, defendants caused twenty-six
     separate CIMI customer accounts to purchase approximately $7.5 million of
     privately-placed Water Point Systems, Inc. ("Water Point"), debt securities
     and that defendants subsequently exchanged some of these securities for
     other Water Point securities with less favorable terms.  The Commission
     further alleges that defendants executed many of these transactions without
     the knowledge or consent of the CIMI customers and by forging, or causing
     to be forged, customer signatures.  Water Point, a Fort Worth, Texas
     company, marketed and distributed home and office water purification
     equipment.  Defendant Smith served as a Water Point director from November
     1992 through March 1995 and, together with his wife, beneficially owned
     12.5 percent of Water Point's outstanding common stock.  On March 10, 1995,
     Water Point filed a Chapter 11 bankruptcy petition, which was later
     converted to a Chapter 7 liquidation.  Water Point investors holding common
     stock and unsecured notes lost their entire investment, while investors
     holding secured notes received less than $0.50 per dollar invested.

          The complaint alleges that CIMI violated the anti-fraud and broker-
     dealer record keeping provisions of the federal securities laws contained
     in Section 17(a) of the Securities Act of 1933 ("Securities Act") and
     Sections 10(b), 15(c)(1) and 17(a)(1) of the Securities Exchange Act of
     1934 ("Exchange Act") and Rules 10b-5, 15c1-2, 15c1-5 and 17a-4 thereunder. 
     The complaint further alleges that Smith violated the anti-fraud provisions
     and aided and abetted CIMI's violations of the broker-dealer anti-fraud and
     record keeping provisions.  

          Simultaneously with the filing of the complaint, a stipulation and
     consent and proposed final judgment was also filed as to both Smith and
     CIMI in which they agree, without admitting or denying the allegations in
     the Commission's complaint, and pending final approval by the Court, to be
     permanently enjoined from future violations of Section 17(a) of the
     Securities and Sections 10(b), 15(c)(1) and 17(a)(1) of the Exchange Act,
     and Rules 10b-5, 15c1-2, 15c1-5 and 17a-4 thereunder. Although the
     complaint sought civil penalties against Smith, the proposed final judgment
     does not impose civil penalties based upon Smith's demonstrated inability
     to pay.




                              ======END OF PAGE 1======