UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16197 / JUNE 28, 1999

SECURITIES AND EXCHANGE COMMISSION V. FIRST NATIONAL ENTERTAINMENT CORP., MILTON J. VERRET, RICKY D. BUSBY, MICHAEL D. SWINGLER, RICHARD C. MAESTRE, AUBURN R. BUSBY, AND MICHAEL B. BYRD, Civil Action No. A 95CV371 (AA) (W.D. Tex., Austin Division)

RICHARD MAESTRE ENJOINED IN INSIDER TRADING SETTLEMENT

The Securities and Exchange Commission announced today that on June 24, 1999, the United States District Court for the Western District of Texas, Austin Division, ordered the entry of a permanent injunction against Richard Maestre, thus settling the Commission’s insider trading action against Maestre. Maestre is the final defendant in the Commission’s litigation against First National Entertainment Corp. (FNAT) and members of its management for violations of the antifraud, periodic reporting and beneficial ownership reporting provisions.

Without admitting or denying the Commission’s allegations, Maestre consented to the entry of the judgment, which permanently enjoins him from violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. The judgment also requires Maestre to pay disgorgement and prejudgment interest, but waives payment of these amounts, and does not impose a civil penalty based on Maestre’s demonstrated inability to pay.

The Commission alleged that Maestre, who directed investor relations for FNAT from 1989 through November 1993, came into possession of information indicating that the revenue projections FNAT was disseminating to the public for an animated film called "Happily Ever After" were inflated. When the film was released in May of 1993, FNAT’s revenues from the film fell far short of its public projections. According to the Commission’s complaint, FNAT stock traded at a high of over $9 in April 1993, before the release of the movie. After the release of the movie, and public disclosure of the poor results, the share price of FNAT’s stock declined sharply. FNAT stock was trading at an average price of approximately $0.28 per share in the first five months of 1995, shortly before the Commission filed its complaint. Maestre sold stock prior to release of the movie, avoiding approximately $16,000 in losses.

The Court previously entered final judgments of permanent injunction and other relief against defendant FNAT on July 5, 1995 (LR-14564); against defendants Auburn R. Busby and Michael D. Swingler on May 9, 1996; against defendants Milton J. Verret and Ricky D. Busby on June 24, 1998 (LR-15820); and against defendant Michael B. Byrd on April 12, 1999 (LR-16125). On February 26, 1996, the Commission instituted administrative proceedings in a related matter, making findings and imposing remedial sanctions against respondents John R. Manion and Continental Capital & Equity Corp. See In the Matter of Continental Capital & Equity Corp. and John R. Manion, Securities Act Rel. No. 33-7267 (February 26, 1996).