SECURITIES AND EXCHANGE COMMISSION
                                   Washington, D.C.

          INVESTMENT ADVISERS ACT OF 1940
          Rel. No.  1774 / November 18, 1998

          Admin. Proc. File No. 3-8854
          __________________________________________________
                                                            :
                           In the Matter of                 :
                                                            :
                    VALICENTI ADVISORY SERVICES, INC.       :
                          100 Baldwin Street                :
                        Elmira, New York  14901             :
                                                            :
                                and                         : 
                                                            :
                         VINCENT R. VALICENTI               :
          __________________________________________________:

          OPINION OF THE COMMISSION

               INVESTMENT ADVISER PROCEEDINGS

                    Ground for Remedial Action

                         Fraudulent Sales Literature

               Registered investment adviser and its president distributed
               two pieces of fraudulent sales literature to prospective
               clients.  Held, it is in the public interest to censure and
               fine respondents, to issue a cease and desist order, and to
               require respondents to send a copy of the Commission's
               opinion and order to clients and, for one year, to
               prospective clients.

          APPEARANCES:

               Michael R. Wolford and Steven E. Cole, of Wolford & Leclair
          LLP, for Valicenti Advisory Services, Inc. and Vincent R.
          Valicenti.

               Carmen J. Lawrence, Henry Klehm III, Daniel J. Goldstein,
          Samuel C. Watkins, Brian H. Fortune, and Daniel C. Feldman, for
          the Division of Enforcement.

          Appeal filed:  July 30, 1997
          Briefing completed:  October 22, 1997
          Oral argument:  July 7, 1998

                                          I.

               Valicenti Advisory Services, Inc. ("VAS" or "the firm"), a
          registered investment adviser, and our Division of Enforcement
          appeal from the initial decision of an administrative law judge.
          The law judge found that VAS willfully violated Sections 206(2)
          and 206(4) of the Investment Advisers Act ("Act") and Rule
          206(4)-1(a)(5) thereunder by negligently misrepresenting certain
          facts in two pieces of promotional literature. [1]  The law judge
          also found that, although Vincent R. Valicenti ("Valicenti"),
          VAS's president and sole owner, was a "cause" of the firm's
          violations within the meaning of Section 203(k)(1) of the Act, he
          did not aid and abet the violations.  The law judge concluded
          that VAS should be censured, and that the proceedings against
          Valicenti should be dismissed.

               VAS argues that the law judge's findings of violation are
          erroneous, and that the proceedings against the firm should also
          be dismissed.  The Division contends that VAS and Valicenti
          ("respondents") acted with scienter in issuing four pieces of
          fraudulent sales literature; that respondents made material
          misrepresentations in addition to those found by the law judge;
          and that a cease and desist order as well as significant
          sanctions and penalties should be imposed on respondents.  Our
          findings are based on an independent review of the record.

                                         II.

               In early 1992, Valicenti decided to prepare materials
          advertising VAS's past performance for distribution to
          prospective clients.  Peter Marchese, VAS's marketing manager,
          was assigned the task of preparing the necessary materials
          subject to Valicenti's specifications and close supervision.  The
          law judge's findings of violation are based on the two pieces of
          sales literature that resulted, both of which were distributed to
          VAS prospects in 1992.  The literature consisted of the chart and
          bar graph that are described below.


          **FOOTNOTES**

          [1]: Section   206(2)(15   U.S.C.    80b-6(2))  prohibits  any
               transaction, practice, or course of  business  that operates
               as  a  fraud  on any client or prospective client.   Section
               206(4)(15 U.S.C.  80b-6(4)) prohibits engaging in any act,
               practice,  or  course   of   business  that  is  fraudulent,
               deceptive, or manipulative.  Rule  206(4)-1(a)(5)(17  C.F.R.
               275.206(4)-1(a)(5))  prohibits  the  distribution  of any
               advertisement  that  contains  any  untrue  statement  of  a
               material fact or is otherwise false or misleading.
               A.  The 1991 Chart

               The 1991 Chart ("Chart") purported to show the rates of
          return realized by a "composite of [VAS] discretionary accounts
          with a balanced objective" over the five-year period 1987 through
          1991. [2]  According to Valicenti, in order to be considered
          "balanced," and therefore included in the Chart, an account's
          objectives "could not be at the extremes of high income or...
          growth," which he defined as any account with equity or bond
          holdings in excess of 70% of the total portfolio.[3]  Under
          Valicenti's definition, the assets of a balanced account had to
          be a mix consisting of between 30% and 70% equities and 30% and
          70% bonds.

               In 1987, VAS had approximately 74 balanced accounts meeting
          Valicenti's definition, in 1988 about 112 such accounts, and in
          each of the years 1989 through 1991 more than 120 such accounts.
          However, very few of these accounts were reflected in the 1991
          Chart.  Indeed, the Chart's rates of return reflected only 13
          accounts for 1987, 17 accounts for 1988, and 19 accounts for each
          of the years 1989 through 1991.  These accounts were selected
          from an original list of 22 chosen by Valicenti (from the more
          than 400 under VAS management in 1991) and assigned to Marchese
          for the calculation of performance results.

               We agree with respondents that, in the present context, the
          term "composite" simply means "compound" [4] or "combination".
          However, we consider that, when, as here, an adviser's sales
          literature states that the rates of return it is advertising are
          based on the combined performance of certain specified accounts,
          the plain meaning of that statement is that the rates reflect the
          performance of all accounts falling within the stated criteria,
          not merely a few chosen by the adviser.  Our conclusion is
          supported by expert testimony in the record.

               Dr. Robert Hagin testified that it is a clear convention in
          the advisory industry that, when the term "composite" is used, it
          means all accounts that meet the stated criteria, an established
          practice in the industry since at least 1973.  There must be "no
          sampling" and "no selectivity."  Dr. Scott Lummer agreed with
          Hagin.  Lummer stated that, in 1992, the word "composite" had a
          specific, well understood meaning in the investment adviser
          community -- the average of all accounts that met the specified
          criteria.  Lummer stated, moreover, that a large percentage of
          investors who focus on performance numbers understand the meaning
          of the term "composite."  Even Dr. Jeffrey Lessard, one of
          respondents' experts, conceded that respondents' use of the term
          "composite" to describe their results "may have been technically
          inaccurate." [5]

               Respondents argue that, in any event, the Division did not
          show that respondents misrepresented VAS's performance; i.e., the
          Division did not establish that the actual performance of VAS's
          discretionary, balanced accounts for the years in question was
          materially different from that depicted in the 1991 Chart.  We do
          not agree.  In our view, the evidence is more than sufficient to
          justify the conclusion that the results reported in the Chart
          were materially misleading.  Most significant is the following
          evidence concerning the firm's performance for 1991.

               In the course of the Division's investigation, respondents
          were asked to supply a list of all accounts for the years 1987
          through 1991 that met Valicenti's criteria for inclusion in the
          Chart.  Since pre-1991 data were not available in VAS's computer
          system, respondents only supplied a list of such accounts for
          1991.  That list totaled 122 accounts and disclosed that the
          accounts' combined 1991 rate of return was only 20.629%, a figure
          more than 7% lower than the rate of 27.89% shown on the Chart for
          1991.

               Respondents now question the accuracy of the information
          they themselves submitted to our staff.  They claim that
          Valicenti did not know how the 122 accounts were selected; that
          the list improperly included accounts that were opened during
          1991; and that the rate of return calculated for the accounts was
          not "market-weighted" like the other rates on the 1991
          Chart. [6]  These contentions are without merit.  The record
          contains a letter from Valicenti to our staff describing in
          detail the criteria used in selecting the 122 accounts.
          Moreover, Joseph Valicenti ("J. Valicenti"), a VAS portfolio
          manager (and Valicenti's son), recalculated the rate of return
          for the accounts on the list leaving out those that assertedly
          were improperly included.  The result was a 21.76% rate of
          return, only 1.1% higher than the rate originally supplied to our
          staff.  J. Valicenti also calculated the market-weighted rate of
          return for the 122 accounts and arrived at a figure of 22.70%,
          still more than 5% lower than the 27.89% rate shown on the 1991
          Chart.

               A wealth of other evidence demonstrates that respondents
          were intent on presenting a misleading portrayal of VAS's past
          performance.  While purporting to be a composite of all balanced
          accounts managed by VAS, the Chart, as noted above, was based on
          only 13 to 19 accounts, although the number meeting Valicenti's
          definition ranged from about 74 to more than 120 during the years
          in question.  Moreover, as the law judge found, Valicenti
          rejected all of Marchese's suggestions that would have provided
          more disclosure. [7] Thus, Valicenti rejected proposed disclosure
          that, among other things, would have revealed that the cited
          rates of return only reflected "a sample of discretionary
          accounts".  Valicenti also chose not to disclose the actual
          number of accounts reflected in the Chart for each of the years
          in question.

               Although the percentage of VAS balanced accounts with less
          than $100,000 in assets ranged from about 28% to 45% of all such
          accounts during the years 1987 through 1991, Valicenti determined
          that the Chart should only include accounts with more than
          $100,000 in assets.  He stated that accounts with less than that
          figure were very difficult to manage on a performance basis
          because of their very high transaction costs.  No disclosure of
          the $100,000 requirement was made in the Chart.  In fact,
          Valicenti rejected proposed disclosure that would have revealed
          the size of included accounts.

               The record does not show, and respondents do not claim, that
          the Chart was shown only to prospective clients with more than
          $100,000 to invest.  We agree with Dr. Lummer that the Chart was
          materially misleading to VAS prospects who wanted to invest less
          than $100,000.

               The record further reveals that Valicenti tinkered with the
          results calculated by Marchese in order to show higher rates of
          return.  At Valicenti's direction, Marchese prepared, and showed
          to Valicenti, a number of interim spreadsheets showing five-year
          performance figures for various combinations of the 22 accounts
          initially selected by Valicenti.  One of the spreadsheets
          calculated the combined performance of 17 of those accounts for
          the year 1987. The calculation showed that the combined accounts
          had suffered a loss for the year, resulting in a -0.84% negative
          rate of return.  Valicenti didn't like what he saw, and indicated
          to Marchese that the spreadsheet "didn't look like a good
          representation."  Thereafter, Valicenti directed Marchese to make
          changes with respect to six of the 17 accounts in his
          computation, all six of which had had a negative 1987
          performance.  Valicenti ordered that three of the accounts be
          dropped completely from the Chart, and that the other three be
          omitted for the year 1987.  At the same time, he directed
          Marchese to add two other accounts to the Chart, both of which
          had had a positive 1987 performance.

               By these expedients, Valicenti transformed a negative rate
          of return for 1987 (-0.84%) into a positive 2.60% rate for the
          year, the rate that appeared in the 1991 Chart.  As noted above,
          the 2.60% rate that Valicenti achieved was based on only 13 of 74
          accounts that met Valicenti's criteria.  Valicenti claimed that
          the three accounts that were totally dropped were eliminated
          because they did not meet those criteria.  However, he did not
          explain why the other three accounts apparently met his criteria
          for 1988 through 1991, but not for 1987.  The 2.60% rate of
          return engineered by Valicenti not only improved the picture
          presented for 1987, but also boosted the cumulative rates of
          return shown in the 1991 Chart for the subsequent two to five-
          year periods. [8]

               Other aspects of the Chart were also misleading.  Although
          the Chart purported to report the performance of the same group
          of accounts over a five-year period, that was not the case.
          Instead, as Valicenti was aware (and as noted above), differing
          numbers of accounts were reflected for different years.
          Moreover, despite the fact that the Chart was purportedly limited
          to balanced accounts, not all of the included accounts fit that
          description.  Indeed, as Dr. Hagin pointed out, 6 of the 13
          accounts reflected in the Chart for 1987 did not meet Valicenti's
          definition.

               Valicenti conceded that individual accounts in the Chart did
          not "necessarily" fall within his definition of "balanced".  He
          stated, however, that, regardless of whether each individual
          account met his definition, his intent was to lump the assets of
          all the accounts in the Chart together and have the total reflect
          the appropriate mix of equities and bonds.  This was clearly
          contrary to the Chart's representation that it reflected a
          composite of balanced accounts.


          **FOOTNOTES**

          [2]: Rates  of  return  were  shown  separately for the accounts'
               total portfolio, the bond component  of  that portfolio, and
               the  equity  component  of  the portfolio.  The  Chart  also
               showed cumulative rates of return  for two, three, four, and
               five-year periods.

               [3]:All of VAS's accounts were "discretionary."

               [4]:The American Heritage Dictionary, Second College Edition
               (1985).

               [5]:We find contrary testimony by respondents' other experts
               unconvincing.  One of them, John Piccione, went so far as to
               claim that the actual performance of  a single account could
               be a composite.

               [6]:Market-weighted rates of return take  into  account  the
               size  of an individual portfolio in relation to the total of
               all portfolios.

               [7]:As  noted  above,  Peter  Marchese  was  VAS's marketing
               manager.

               [8]:See n.2, supra.
               B.  The 1991 Bar Graph

               The 1991 Bar Graph ("Bar Graph") was also prepared by
          Marchese at Valicenti's direction.  It purported to compare the
          five-year cumulative rates of return appearing in the Chart with
          the five-year performance of a sample of money managers.
          Valicenti instructed Marchese to order data from CDA Investment
          Technologies, Inc. that showed the performance results achieved
          by about 1135 money managers for accounts with a ratio of 50%
          equities to 50% bonds.  The rates of return achieved by the money
          managers were shown in three columns; one showing the rates
          earned on a total portfolio equally divided between equities and
          bonds, the second showing the rates achieved for the portfolio's
          equity component, and the third showing the rates earned on the
          bond component.  An asterisk was placed in each column indicating
          where VAS stood vis-a-vis the money managers.

               The assets reflected in the Chart were composed of about 54%
          equities.  Since equities outperformed bonds during the relevant
          period, comparing the rates of return appearing in the Chart with
          the rates achieved for accounts with only 50% equities resulted
          in a somewhat more favorable portrayal of VAS's performance than
          was warranted.  However, the record does not show that this
          circumstance improved the depiction of that performance in any
          material amount.  Nevertheless, the Bar Graph was materially
          misleading since it compared the rates of return achieved by
          other money managers with the materially distorted VAS rates
          appearing in the Chart.

               The Chart and the Bar Graph presented a false portrayal of
          VAS's past performance and a misleading comparison of that
          performance with the performance of other money managers.  Both
          of these items were materially misleading to prospective clients
          of the firm.  We cannot agree with the law judge that, in
          creating these documents, Valicenti acted in good faith.  On the
          contrary, the record shows that, in an effort to win new clients,
          he deliberately distorted the truth. [9]  Valicenti rejected all
          disclosure that would have revealed that, contrary to the Chart's
          stated coverage, it reflected only a small sampling of accounts
          that differed in number in different years.  He excluded accounts
          under $100,000 because of their higher costs but refused to
          disclose that fact.  He manipulated the narrow range of accounts
          included in the Chart in order to achieve better results.  He
          improperly included non-balanced accounts in the Chart.  And,
          finally, he created a misleading comparison of the Chart's
          distorted rates of return with the rates of other money managers.

               We accordingly conclude that VAS, willfully aided and
          abetted by Valicenti, willfully violated Sections 206(1), [10]
          206(2), and 206(4) of the Act and Rule 206(4)-1(a)(5) thereunder.
          We further conclude, pursuant to Section 203(k)(1) of the Act,
          that Valicenti was a cause of his firm's violations. [11]

               As indicated above, the Division argues that respondents
          issued two additional pieces of fraudulent sales literature: 1992
          updates of the Chart and the Bar Graph.  The law judge concluded
          that the record did not establish that the updates had ever been
          distributed to clients or prospective clients.  On the basis of
          our review of the record, we are unable to conclude that the law
          judge erred in this regard.  Accordingly, we make no findings
          with respect to these two items.

                                         III.

               Respondents argue that no sanctions are warranted.  They
          assert, among other things, that their record in the advisory
          business is otherwise unblemished, that the advertisements at
          issue were an isolated occurrence, that no one was harmed by
          their actions, and that there is no basis for a cease and desist
          order since there is no reasonable likelihood of further
          violations on their part.

               We take a less sanguine view of respondents' violations.
          Investment advisers are fiduciaries whose actions must be
          governed by the highest standards of conduct. [12]  However,
          respondents chose to ignore those standards, and perpetrated a
          serious fraud on prospective clients of the firm.  Contrary to
          the claim made by respondents, their actions demonstrate a
          substantial likelihood of further misconduct on their part.

               Under all the circumstances, we have determined that it is
          appropriate in the public interest to censure respondents, to
          issue a cease and desist order, and to fine VAS $50,000 and
          Valicenti $25,000.  We shall also require that respondents send a
          copy of our opinion and order to all of their existing clients
          and, for one year, to all prospective clients.

               An appropriate order will issue. [13]

               By the Commission (Chairman LEVITT and Commissioners JOHNSON
          and HUNT); Commissioners CAREY and UNGER not participating.



          Jonathan G. Katz
          Secretary

          **FOOTNOTES**

          [9]: As we have previously stated, credibility determinations can
               be  overcome  "only  where  the record contains `substantial
               evidence' for doing so."  See  Anthony  Tricarico, 51 S.E.C.
               457, 460 (1993), and the authorities there  cited.   We find
               such evidence here.

               [10]:Section  206(1)(15  U.S.C.  80b-6(1))  prohibits the
               employment of any device, scheme, or artifice to defraud any
               client or prospective client.

               [11]:  We have found that Valicenti acted with scienter.   A
               respondent  is  a  "cause"  of  another's  violation  if the
               respondent  "knew  or  should  have  known"  that his act or
               omission  would  contribute  to  such  violation.    Section
               203(k)(1).

               [12]:See, e.g., SEC v. Capital Gains Research Bureau,  Inc.,
               375  U.S.  180, 191-192 (1963); Rosenfeld v. Black, 445 F.2d
               1337, 1342-1344 (2d Cir. 1971).

               [13]:All of  the  contentions  advanced  by the parties have
               been  considered.   They  are rejected or sustained  to  the
               extent that they are inconsistent  or  in  accord  with  the
               views expressed herein.
                              
                               UNITED STATES OF AMERICA
                                      before the
                          SECURITIES AND EXCHANGE COMMISSION

          INVESTMENT ADVISERS ACT OF 1940
          Rel. No.  1774 / November 18, 1998

          Admin. Proc. File No. 3-8854

          __________________________________________________
                                                            :
                           In the Matter of                 :
                                                            :
                    VALICENTI ADVISORY SERVICES, INC.       :
                          100 Baldwin Street                :
                        Elmira, New York  14901             :
                                                            :
                                 and                        :
                                                            : 
                         VINCENT R.  VALICENTI              :
          __________________________________________________:

          ORDER IMPOSING REMEDIAL SANCTIONS

               On the basis of the Commission's opinion issued this day, it
          is

               ORDERED that Valicenti Advisory Services, Inc. (VAS) and
          Vincent R. Valicenti (Valicenti) be, and they hereby are,
          censured; and it is further

               ORDERED that VAS and Valicenti cease and desist from
          committing or causing any violation and committing or causing any
          future violation of Sections 206(1), 206(2), and 206(4) of the
          Investment Advisers Act and Rule 206(4)-1(a)(5) thereunder; and
          it is further

               ORDERED that, within 30 days of the entry of this order, VAS
          shall pay a civil money penalty in the amount of $50,000, and
          Valicenti shall pay a civil money penalty in the amount of
          $25,000, to the United States Treasury.  Such payment shall be:
          (i) made by United States postal money order, certified check,
          bank cashier's check, or bank money order;  (ii) made payable to
          the Securities and Exchange Commission;  (iii) hand-delivered or
          mailed to the Comptroller, Securities and Exchange Commission,
          Operations Center, 6432 General Green Way, Stop 0-3, Alexandria,
          VA 22312; and (iv) submitted under cover letter which identifies
          VAS and Valicenti as respondents in this proceeding, and the file
          number of this proceeding.  A copy of the cover letter and check
          shall be sent to Daniel J. Goldstein, counsel for the Division of
          Enforcement, Securities and Exchange Commission, Northeast
          Regional Office, 7 World Trade Center - 13th floor, New York,
          N.Y. 10048; and it is further

               ORDERED that VAS and Valicenti (respondents) shall mail a
          copy of this opinion and order, together with a cover letter in a
          form acceptable to the staff of the Commission, to each of their
          existing clients by certified mail, return receipt requested,
          within thirty (30) days from the date of this order.  From the
          effective date of this order until the expiration of twelve (12)
          months, respondents shall provide a copy of this opinion and
          order to all prospective investment advisory clients not less
          than forty-eight (48) hours prior to entering into any written or
          oral investment advisory contract (or no later than the time of
          entering into such contract if the client has the right to
          terminate the contract without penalty within five (5) business
          days after entering into the contract).  Also, within thirty (30)
          days from the date of this order, respondents shall execute and
          deliver to Daniel J. Goldstein at the Commission's Northeast
          Regional Office an affidavit that they have provided this opinion
          and order to their existing clients in accordance with the terms
          of this order.  Finally, within thirteen (13) months from the
          date of this order, respondents shall execute and deliver to
          Daniel J. Goldstein at the Commission's Northeast Regional Office
          an affidavit that they have provided this opinion and order to
          their prospective clients in accordance with the terms of this
          order.

               By the Commission.


               Jonathan G. Katz
               Secretary