UNITED STATES SECURITIES AND EXCHANGE COMMISSION

             Litigation Release No. 15842  / August 12, 1998

             Securities and Exchange Commission v. Timothy J. Lyons,
             Civil Action No. 98 CV 1471J RBB (S.D. Cal.);

                  On August 12, 1998, the Commission announced the filing
             of a Complaint in the United States District Court for the
             Southern District of California against Timothy J. Lyons
             ("Lyons"), age 48, a resident of Rancho Santa Fe,
             California, and a former trader and portfolio manager at two
             registered investment adviser firms.  The Commission's
             Complaint charges Lyons with violating the antifraud
             provisions of the federal securities laws by failing to
             disclose his conflict of interest in fraudulently allocating
             profitable equity "day" trades (buying and selling the same
             security within the same day or within a few days) to his
             personal accounts at the expense of client accounts.  The
             Complaint alleges that these violations occurred: 1) from at
             least 1991 through July 1993, at Nicholas-Applegate Capital
             Management ("NACM"), a registered investment adviser located
             in San Diego, California, which employed Lyons as the trader
             and portfolio manager for NACM's employee profit-sharing
             retirement plan; and 2) from August 1993 through August
             1995, at Lyons Capital Partners ("LCP"), an investment
             adviser firm formerly registered with the Commission of
             which Lyons was a 70% owner, and where he acted as the
             trader and portfolio manager for all of LCP's client
             accounts.  As of August 1995, LCP managed over $30 million
             in assets for its clients.

                  According to the Complaint, Lyons used the time between
             placing an order for a day trade and allocating such trade
             to a specific account to assess whether the trade was
             profitable.  The Complaint alleges Lyons perpetrated a
             fraudulent scheme by consistently allocating profitable day
             trades to his personal accounts (which generated net profits
             of approximately $1.75 million) and unprofitable day trades
             to his clients' accounts (which generated net losses of over
             $358,000).  Additionally, the Complaint alleges that Lyons
             breached his fiduciary duty to his clients by failing to
             disclose his conflict of interest in favoring his personal
             accounts over client accounts in allocating day trades.
             Further, the Complaint alleges that Lyons aided and abetted
             NACM's books and records violations by failing to report
             completely and accurately his personal trading to NACM.

                  The Commission seeks a permanent injunction against
             Lyons prohibiting further violations of Section 10(b) of the
             Securities Exchange Act of 1934 and Rule 10b-5 thereunder
             and Sections 206(1) and 206(2) of the Investment Advisers
             Act of 1940, and aiding and abetting violations of Section
             204 of the Advisers Act and Rule
             204-2(a)(12) thereunder.  The Complaint also seeks an order
             that Lyons disgorge his illicit profits ($1.75 million) and
             pay prejudgment interest on those profits.  The Complaint
             further seeks an order that Lyons pay civil monetary
             penalties for his violative conduct.

                  In a related matter, the Commission instituted and
             settled a cease-and-desist and administrative proceeding
             against NACM in which NACM consented to the entry of an
             Order, without admitting or denying the findings in the
             Commission's Order, that it pay a civil penalty of $250,000
             and cease and desist from committing or causing violations
             and any future violations of the books and records
             provisions of the Advisers Act.  In addition, NACM was
             censured and agreed to maintain and implement procedures
             reasonably designed to supervise its employees with a view
             toward preventing and detecting violations of the books and
             records provisions of the Advisers Act.  Further, the
             Commission's Order found that NACM failed reasonably to
             supervise Lyons while he was employed at NACM. In the Matter
             of Nicholas-Applegate Capital Management, A California
             Limited Partnership, Investment Advisers Act of 1940, Rel.
             No.1741.