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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

LITIGATION RELEASE No. 14726 /  November 22, 1995

ACCOUNTING AND AUDITING ENFORCEMENT  
RELEASE No. 737 /  November 22, 1995

SECURITIES AND EXCHANGE COMMISSION v. SEQUOIA SYSTEMS, INC.,
GABRIEL P. FUSCO, KENT R. ALLEN, KEITH D. JOHNSON, AND EDWIN J.
HUDSON, JR., Civil Action No. 95-0321 (D.D.C. February 16, 1995).

The Securities and Exchange Commission ("Commission") today
announced that on November 21, 1995, the Honorable Louis F.
Oberdorfer of the United States District Court for the District
of Columbia entered the Final Judgment of Permanent Injunction
and Other Relief as to Defendant Edwin J. Hudson, Jr. ("Final
Judgment").  The Final Judgment permanently enjoins Edwin J.
Hudson, Jr. ("Hudson") from future violations of Sections 10(b)
and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange
Act") and Rules 10b-5 and 13b2-1 thereunder and orders him to
disgorge the sum of $75,000, representing commissions he received
in connection with certain purported sales transactions that were
improperly booked as revenue by his former employer, Sequoia
Systems, Inc. ("Sequoia"), as alleged in the Complaint.  Based
upon Hudson's demonstrated inability to pay, the Commission
waived payment of all but $10,000 of the disgorgement amount and
the payment of any penalty. 

Hudson has consented, without admitting or denying the
allegations of the Commission's Complaint, to the entry of the
Final Judgment described above.  The Complaint, filed on February
16, 1995, alleges that Hudson, a former Sequoia salesman,
together with three former officers of Sequoia, engaged in a
fraudulent scheme to inflate the revenue and pre-tax income
reported by Sequoia in its periodic and annual reports and
financial statements that were publicly disseminated and filed
with the Commission.  Sequoia is a Nasdaq-listed company
headquartered in Marlborough, Massachusetts, engaged in the
design, manufacture and service of fault-tolerant computer
systems.  Specifically, the Complaint alleges that Sequoia made
materially false and misleading statements in all but one of its
quarterly reports filed with the Commission during fiscal 1991
and 1992, as well as in its 1991 and 1992 annual reports. 
Sequoia recognized and recorded sales revenue notwithstanding the
fact that the consummation of the sales transactions and
Sequoia's receipt of payment for its products were contingent
upon future events, or in circumstances where there was no
binding sales contract.  

With respect to Hudson, the Complaint alleges that he falsified
at least one purchase order, made false statements to Sequoia's
independent auditors concerning the terms and status of certain
sales transactions, and caused at least one Sequoia customer to
make false statements to Sequoia's auditors.  

Consents have been filed and final judgments have been entered
with respect to all other defendants.  See Litigation Release No.
14417; Accounting and Auditing Enforcement Release No. 647
(February 16, 1995). See also In the Matter of James Edward
Palmer and John Louis Thonet, Administrative Proceeding File No.
3-8620 (February 16, 1995); In the Matter of Thomas Milo Somers,
Administrative Proceeding File No. 3-8621 (February 16, 1995).