For Immediate Release                                       98-53

        SEC Proposes Rule Change to Combat Microcap Fraud

     Washington, DC, May 20, 1998--The Securities and Exchange
Commission today proposed a rule change that would help reduce
microcap securities fraud.  The measure, which amends Rule 504 of
Regulation D, would require that all securities issued under Rule
504 be "restricted securities" and could only be resold after
meeting certain criteria.

     "The Commission has taken another important step to address
microcap fraud," said SEC Chairman Arthur Levitt.  "This measure
strikes a balance between the need to combat microcap fraud and
the needs of small businesses to raise seed capital in an
efficient manner.  Today's rule change is another step on the way
to our goal of shutting down the pump and dump boiler rooms that
prey on small investors.  At the same time, it will help protect
the integrity of the capital formation process."

     Currently, Rule 504 provides an exemption from Securities
Act registration (e.g. extensive disclosure, including audited
financial statements and other details) when small businesses
make securities offerings that do not exceed an aggregate annual
amount of $1 million.  Further, Rule 504 allows stock purchasers
to receive securities that are not "restricted."  (As defined
under Rule 144, a restricted security can only be freely traded
in the public markets if it meets certain conditions, including
that it be held for a certain period of time, typically at least
one year.)  Purchasers of Rule 504 stock may resell their
securities without registration or other sales limits.

     Fraudsters take advantage of Rule 504 in a variety of ways.
It has allowed them to acquire large quantities of cheap
unregistered stock, artificially pump up the share price through
false statements and other manipulative activity, and then sell
the stock at a great profit.

     Today's proposal would help put an end to pump and dump
schemes by reclassifying all securities issued under Rule 504 as
"restricted securities."  As such, these securities could only be
resold after a one-year holding period, through registration, or
through another exemption.

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