Litigation Release No. 17914 / January 7, 2002

FINAL JUDGMENT SETTING DISGORGEMENT, PREJUDGMENT INTEREST AND CIVIL PENALTIES AGAINST PRINCIPAL OF BROKERAGE FIRM

SECURITIES AND EXCHANGE COMMISSION V. DISCOVERY CAPITAL GROUP, ERIK WALSH, AND JOHN ABRESCH, Case No. 02-60363-CIV-HUCK (S.D. Fla., filed March 14, 2002)

The Securities and Exchange Commission ("SEC" or the "Commission") announced that on December 11, 2002, the United States District Court for the Southern District of Florida entered a Final Judgment Setting Disgorgement, Prejudgment Interest and Civil Penalty ("Final Judgment") against Erik Walsh a/k/a Erik Hutton Masters ("Walsh"), the president and CEO of Discovery Capital Group, Inc. ("Discovery Capital"), a broker-dealer registered with the Commission since 1992. The Judgment, entered by the Court pursuant to the October 4, 2002 Judgment of Permanent Injunction and Other Relief against Walsh, orders him to disgorge $496,711 with prejudgment interest of $17,571.72 and imposes a civil penalty in the amount of $90,000. Walsh consented to the entry of the Final Judgment without admitting or denying the allegations of the Commission's Complaint.

On March 14, 2002, the SEC filed an emergency action against Walsh and others seeking to enjoin the ongoing fraudulent offering of securities issued by Discovery Capital in the form of promissory notes and preferred stock. The Complaint alleged that from at least June 2001 through the filing of the action, Discovery Capital raised at least $2.7 million through the use of a network of primarily unlicensed sales agents using high pressure sales tactics and making misrepresentations about, among other things, Discovery Capital's growth, its affiliations with well-known brokerage firms and other institutions, and the safety of the investments. The Complaint further alleged that Walsh misappropriated investor proceeds through the use of an "off the books" account in the name of Discovery Capital.