UNITED STATES OF AMERICA
                            Before the
                SECURITIES AND EXCHANGE COMMISSION


Securities Act of 1933
Release No.  7334 / September 23, 1996

Securities Exchange Act of 1934
Release No. 37712 / September 23, 1996

Investment Company Act of 1940
Release No. 22237 / September 23, 1996

Administrative Proceeding
File No. 3-9092


---------------------------                           
                           :
In the Matter of           :     ORDER INSTITUTING PUBLIC        
                           :     PROCEEDINGS PURSUANT TO 
MONNESS, CRESPI,           :     SECTION 8A OF THE SECURITIES
HARDT & CO., INC., and     :     ACT OF 1933, SECTIONS 15(b)(4),
NEIL CRESPI,               :     15(b)(6), AND 21C OF THE
                           :     SECURITIES EXCHANGE ACT OF
                           :     1934, AND SECTION 9(f)        
          Respondents.     :     OF THE INVESTMENT COMPANY ACT   
                           :     OF 1940, AND FINDINGS, CEASE AND
                           :     DESIST ORDER, AND ORDER IMPOSING
                           :     SANCTIONS                       
----------------------------

                                I.
 
     The Securities and Exchange Commission ("Commission") deems
it appropriate and in the public interest to institute public
administrative proceedings pursuant to Section 8A of the
Securities Act of 1933 ("Securities Act"), Sections 15(b)(4),
15(b)(6), and 21C of the Securities Exchange Act of 1934
("Exchange Act"), and Section 9(f) of the Investment Company Act
of 1940 ("Investment Company Act") against Monness, Crespi, Hardt
& Co., Inc. ("MCH"), a broker-dealer registered with the
Commission, and Neil Crespi ("Crespi"), President of MCH
(collectively, "Respondents").       

                               II.

     In anticipation of the institution of these proceedings, MCH
and Crespi have submitted Offers of Settlement ("Offers") to the
Commission, which the Commission has determined to accept. 
Solely for the purpose of these proceedings and any other
proceedings brought by or on behalf of the Commission or in which
the Commission is a party, and without admitting or denying the





findings contained herein, MCH and Crespi consent to the issuance
of this Order Instituting Public Proceedings, and Findings, Cease
and Desist Order, and Order Imposing Sanctions ("Order") and to
the entry of the findings and the imposition of the remedial
sanctions set forth below.

     Accordingly, IT IS ORDERED that proceedings pursuant to 
Section 8A of the Securities Act, Sections 15(b)(4), 15(b)(6),
and 21C of the Exchange Act, and Section 9(f) of the Investment
Company Act be, and hereby are, instituted against MCH and
Crespi.

                               III.

     On the basis of this Order and Respondents' Offers, the
Commission makes the following findings:

A.   Respondents

     1.   MCH has been registered with the Commission as a
broker-dealer since February 11, 1977.  MCH's principal place of
business is in New York City.

     2.   Crespi is one of three principals of MCH and serves as
the firm's president and head of trading.

B.   Summary

     1.   This case involves violations of certain antifraud
provisions of the Securities Act, Exchange Act, and Investment
Company Act resulting from undisclosed mark-ups and mark-downs on
over-the-counter ("OTC") securities trades executed by MCH and
Crespi.  Respondents obtained a total of $2,022,363 in
undisclosed mark-ups and mark-downs in 343 OTC trades executed by
MCH as a riskless principal from February 1989 through July 1991.

C.   Facts

     1.   Shearson Advisors was an investment advisory division
of Shearson Lehman Brothers Inc., which was registered with the
Commission as both an investment adviser and a broker-dealer.

     2.   During February 1989 through July 1991, Shearson
Advisors served as investment adviser to Shearson Lehman Brothers
Investment Portfolios - Growth Portfolio, Shearson Lehman
Brothers Investment Portfolios - Special Equities Portfolio
("Special Equities Portfolio"), and Shearson VIP Fund - Equity
Series (together, the "Funds").  Each Fund was a registered
investment company.

     3.   From in or about February 1989 to in or about July
1991, Shearson Advisors used MCH to execute certain of the Funds'
OTC transactions.  MCH did not make a market in any OTC
securities.  





     4.   Of the 343 OTC transactions at issue in this proceeding
(the "Transactions"), 268 involved 10,000 or more shares, and 25
Transactions involved 100,000 or more shares.  Crespi was MCH's
trader on substantially all of the Transactions.  He received the
orders from Shearson Advisors, executed the trades with market-
makers and informed Shearson Advisors of the price that would be
paid or received by the Funds.

     5.   Shearson Advisors understood that MCH's compensation on
OTC trades was to be six cents per share, with the exception of
trades for the Special Equities Portfolio, for which MCH's
compensation was to be seven cents per share.  Crespi knew that
Shearson Advisors understood MCH's compensation to be limited on
these terms.

     6.   In 299 of the 343 Transactions, MCH provided to
Shearson Advisors written confirmations stating that MCH had
acted as agent.  In the remaining 44 Transactions, MCH provided
to Shearson Advisors written confirmations stating that MCH had
acted as principal.

     7.   In fact, in each of the 343 Transactions, MCH acted as
a "riskless principal" -- temporarily acquiring the securities
into its own proprietary account, where MCH would add a mark-up
or a mark-down (depending on whether the Fund was purchasing or
selling the securities) in addition to the six or seven cent per
share compensation to which MCH was entitled.  These undisclosed
mark-ups and mark-downs ranged from one half cent to 66 cents per
share, and averaged 14 cents per share in excess of the agreed
six or seven cents.  

     8.   As a result of this riskless principal trading, MCH
obtained profits of at least $2,022,363 in excess of the six or
seven cents per share to which it was entitled.1

     9.   MCH and Crespi never disclosed to Shearson Advisors or
the Funds that, when executing the Transactions, MCH was acting
                    

1    Subsequent to the events described herein, the assets of
     Shearson Advisors were acquired by Smith Barney, Harris
     Upham & Co. Incorporated, later renamed Smith Barney
     Shearson Inc. ("SBS").  SBS and Lehman Brothers Inc. ("LB")
     have made payments to the Funds to compensate the Funds,
     inter alia, for losses incurred by the Funds on the
     Transactions with MCH.  SBS and LB have received
     reimbursement from ICI Mutual Insurance Company ("ICI
     Mutual") for certain payments to the Funds, pursuant to an
     ICI Mutual insurance policy which named the Funds as
     insureds.  ICI is subrogated to the rights of SBS and LB to
     obtain recovery from MCH for, inter alia, these payments
     made by SBS and LB to the Funds.

                   
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as a riskless principal and receiving a mark-up or mark-down in
addition to the agreed six or seven cents.

     10.  None of MCH's trade confirmations for the Transactions
disclosed the mark-ups or mark-downs by MCH.  All trade
information appearing on the confirms was inputted into a
computer system by MCH personnel and electronically transmitted
to MCH's clearing agent for printing.  Crespi was the ultimate
source of this information.  Crespi failed to take any steps to
cause the confirms to disclose MCH's true compensation.  In
addition, Crespi failed to take any steps to cause the confirms
for most of the Transactions to disclose accurately MCH's
capacity.

D.   Legal Analysis

     1.   Violations of Section 17(a) of the Securities Act and
          Sections 10(b) and 15(c) of the Exchange Act and Rules
          10b-3(a), 10b-5 and 15c1-2 Thereunder                  

            
     a.   Section 17(a) of the Securities Act prohibits, in the
offer or sale of securities, (1) devices, schemes, or artifices
to defraud, (2) misrepresentations or omissions of material
facts, or (3) transactions, practices, or courses of business
that would operate as a fraud.  Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder prohibit devices, schemes, and
artifices to defraud in connection with the purchase or sale of
securities.  Scienter is a required element to prove violations
of Section 17(a)(1), Section 10(b) and Rule 10b-5.  Aaron v. SEC,
446 U.S. 680, 701-02 (1980); Ernst & Ernst v. Hochfelder, 425
U.S. 185 (1976).  Section 15(c) of the Exchange Act, and Rules
10b-3(a) and 15c1-2 thereunder prohibit any broker or dealer from
employing any manipulative, deceptive, or otherwise fraudulent
device or contrivance when effecting any transaction in any
security otherwise than on a national securities exchange.  

     b.   MCH violated Section 17(a) of the Securities Act,
Sections 10(b) and 15(c) of the Exchange Act and Rules 10b-3(a),
10b-5, and 15c1-2 thereunder.  Specifically, (i) MCH failed to
disclose to the Funds that it was interpositioning its own
proprietary account and acting as a riskless principal when
executing the Transactions; and (ii) MCH charged the Funds
undisclosed mark-ups and mark-downs totaling $2,022,363.
See, e.g., SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990);
Sinclair v. SEC, 444 F.2d 399, 400-01 (2d Cir. 1971).

     c.   Crespi, who received the orders for substantially all
of the Transactions from Shearson Advisors, executed the trades
and informed Shearson Advisors of the price to be paid or
received by the Funds, violated Section 17(a) of the Securities
Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.


                   
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     d.     Crespi also aided and abetted MCH's violations of
Section 15(c) of the Exchange Act and Rules 10b-3(a) and 15c1-2
thereunder.  Section 15(b)(6)(A)(i) of the Exchange Act, in
conjunction with Section 15(b)(4)(E), authorizes the Commission
to take administrative enforcement action against a person
associated with a broker or dealer who aids or abets violations
of the Exchange Act.  The elements of aiding and abetting
liability are:  (1) a securities violation by a primary party
other than the alleged aider and abettor; (2) knowledge or
reckless disregard by the aider and abettor of the primary
violation; and (3) substantial assistance rendered by the aider
and abettor in the commission of the primary violation.  IIT v.
Cornfeld, 619 F.2d 909, 922 (2d Cir. 1980).  MCH committed its
violations largely through the acts and omissions of Crespi. 
Thus, Crespi was aware of and substantially assisted in the
commission of the acts constituting MCH's violations.  Crespi was
also a "cause" of MCH's violations within the meaning of Section
8A of the Securities Act, Section 21C of the Exchange Act and
Section 9(f) of the Investment Company Act, because he committed
acts and omissions that he knew or should have known would
contribute to the foregoing violations by MCH.

     2.   Violations of Section 37 of the Investment Company Act

     a.   The Commission has authority to bring an administrative
action for violation of Section 37 of the Investment Company Act
against a respondent who converts assets of a registered
investment company.  In the Matter of International Research &
Management Corp., Investment Advisers Act Release No. 617,
Investment Company Act Rel. No. 10150 (Mar. 6, 1978).

     b.   MCH and Crespi violated Section 37 by obtaining
undisclosed mark-ups and mark-downs from the Funds, which were
registered investment companies.  See In the Matter of Chandler
Management Corp., Exchange Act Rel. No. 9735, Investment Company
Act Release No. 7331 (Aug. 17, 1972).

     3.   Violations of Exchange Act Rule 10b-10

     a.   Rule 10b-10(a)(1) requires brokers to provide their
customers with written notification at or before completion of
each transaction specifying the capacity in which the broker is
acting when executing the transaction.2  Rule 10b-10(a)(8)
prescribes that when a broker or dealer acts as a riskless
                    

2    At the time of Respondents' conduct, this requirement was
     contained in Rule 10b-10(a)(1).  Pursuant to a later
     amendment, the requirement was restated in Rule 10b-
     10(a)(2).  See Confirmation of Transactions, Exchange Act
     Release No. 34962, 57 S.E.C. Docket No. 2674 (Nov. 10,
     1994).

                   
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principal, and is not a market maker in the subject security, the
broker or dealer must provide the customer with written
confirmation at or before completion of the transaction
displaying "the amount of any mark-up, mark-down, or similar
remuneration received in [the] equity security."3

     b.   MCH violated Rule 10b-10 by providing confirms to
Shearson Advisors for 299 of the 343 Transactions which falsely
indicated that MCH was acting as an agent in executing the
Transactions, when MCH was in fact acting as a riskless
principal.  MCH violated Rule 10b-10 by issuing confirms to the
Funds for each of the Transactions which failed to disclose the
difference between the price to the Funds and MCH's own
contemporaneous purchase or sale price.  For the reasons set
forth in Section III.D.1.d. above, Crespi aided and abetted and
caused MCH's violations of Rule 10b-10.

                               IV.

     A.   While engaged in the conduct described above, MCH and
Crespi, directly and indirectly, used the means or
instrumentalities of interstate commerce, or of the mails.

     B.   Based on the foregoing, the Commission finds that:

     1.   MCH willfully violated Section 17(a) of the Securities
          Act, Sections 10(b) and 15(c)(1) of the Exchange Act
          and Rules 10b-3(a), 10b-5, 10b-10 and 15c1-2
          thereunder, and Section 37 of the Investment Company
          Act; and

     2.   Crespi willfully violated Section 17(a) of the
          Securities Act, Section 10(b) of the Exchange Act and
          Rule 10b-5 thereunder, and Section 37 of the Investment
          Company Act, and aided and abetted and caused MCH's
          violations of Section 15(c)(1) of the Exchange Act and
          Rules 10b-3(a), 10b-10, and 15c1-2 thereunder.

                                V.

     In view of the foregoing, it is in the public interest to
impose the sanctions specified in the Offers.

     Accordingly, IT IS HEREBY ORDERED that:

                    

3    At the time of Respondents' conduct, Rule 10b-10(a)(8) was
     in effect.  Pursuant to the later amendment, this
     requirement was restated in Rule 10b-10(a)(2)(ii)(A).  See
     Confirmation of Transactions, Exchange Act Release No.
     34962, 57 S.E.C. Docket No. 2674 (Nov. 10, 1994).

                   
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     A.   MCH shall, effective immediately, cease and desist from
committing or causing any violation, and from committing or
causing any future violation, of Section 17(a) of the Securities
Act, Sections 10(b) and 15(c)(1) of the Exchange Act and Rules
10b-3(a), 10b-5, 10b-10 and 15c1-2 thereunder, and Section 37 of
the Investment Company Act;

     B.   Crespi shall, effective immediately, cease and desist
from committing or causing any violation, and committing or
causing any future violation, of Section 17(a) of the Securities
Act, Sections 10(b) and 15(c)(1) of the Exchange Act and Rules
10b-3(a), 10b-5, 10b-10 and 15c1-2 thereunder, and Section 37 of
the Investment Company Act;

     C.   Respondents MCH and Crespi be, and hereby are,
censured;

     D.   MCH pay, within ten business days of the date of this
Order, disgorgement of $1,521,906.53.  Such payment shall be made
directly to ICI Mutual Insurance Company, under cover letter
which identifies MCH as a Respondent in these proceedings and the
file number of these proceedings.  A copy of the cover letter and
payment shall be simultaneously transmitted to Wayne M. Carlin,
Assistant Regional Director, Northeast Regional Office,
Securities and Exchange Commission, 7 World Trade Center, 13th
Floor, New York, NY 10048; 

     E.   MCH pay, within ten business days of the date of this
Order, to the United States Treasury a civil penalty in the
amount of $500,000 pursuant to Section 21B(a)(4) of the Exchange
Act.  Such payment shall be: (1) made by United States postal
money order, certified check, bank cashier's check or bank money
order; (2) made payable to the Securities and Exchange
Commission; (3) delivered to the Comptroller, Securities and
Exchange Commission, 450 5th Street, N.W., Washington, DC 20549;
and (4) submitted under cover letter which identifies MCH as a
Respondent in these proceedings and the file number of these
proceedings, a copy of which cover letter and money order or
check shall be sent to Wayne M. Carlin, Assistant Regional
Director, Northeast Regional Office, Securities and Exchange
Commission, 7 World Trade Center, 13th Floor, New York, NY 10048;

     F.   Crespi pay, within ten business days of the date of
this Order, to the United States Treasury a civil penalty in the
amount of $100,000 pursuant to Section 21B(a)(4) of the Exchange
Act.  Such payment shall be: (1) made by United States postal
money order, certified check, bank cashier's check or bank money
order; (2) made payable to the Securities and Exchange
Commission; (3) delivered to the Comptroller, Securities and
Exchange Commission, 450 5th Street, N.W., Washington, DC 20549;
and (4) submitted under cover letter which identifies Crespi as a
Respondent in these proceedings and the file number of these

                   
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proceedings, a copy of which cover letter and money order or
check shall be sent to Wayne M. Carlin, Assistant Regional
Director, Northeast Regional Office, Securities and Exchange
Commission, 7 World Trade Center, 13th Floor, New York, NY 10048;

     G.   MCH shall comply with its undertakings, as specified in
its Offer of Settlement:

          1.   MCH shall retain an outside consultant
               ("Consultant"), not unacceptable to the
               Commission's staff, at MCH's expense, to conduct a
               review of MCH's policies, practices, and
               procedures to determine the adequacy of such
               policies, practices, and procedures to reasonably
               detect and prevent the violations of the federal
               securities laws that gave rise to this proceeding.

               The Consultant shall make recommendations as to
               the adoption and implementation of any new and/or
               revised policies, practices, and procedures deemed
               necessary or appropriate in light of the
               violations of the federal securities laws that
               gave rise to this proceeding.

          2.   MCH shall adopt, implement, and maintain all
               policies, practices, and procedures recommended by
               the Consultant within the period of time
               prescribed in Paragraph V.G.3. below; provided,
               however, that as to any recommendation of the
               Consultant which MCH determines is, in whole or in
               part, unduly burdensome, MCH may suggest an
               alternative procedure designed to achieve the same
               objective or purpose as that of the recommendation
               of the Consultant.  MCH shall set forth in an
               affidavit to be submitted to the Consultant
               pursuant to this Paragraph such alternative
               procedure, and a description of how such
               alternative procedure achieves the same objective
               or purpose as the Consultant's original
               recommendation.  The Consultant shall evaluate the
               alternative procedure proposed by MCH and MCH will
               abide by the Consultant's determination with
               regard thereto and adopt those recommendations
               which the Consultant shall ultimately determine
               are appropriate.

          3.   Within 90 days of the issuance of this Order, MCH
               shall file an affidavit with the Commission's
               staff, setting forth the details of MCH's
               implementation of the Consultant's recommendations
               pursuant to Paragraph V.G.2. above.  MCH may apply
               to the staff of the Commission for an extension of
               this deadline, and upon a showing of good cause by

                   
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               MCH, the Commission's staff may grant such
               extensions for whatever time period it deems
               appropriate, but in no event shall the affidavit
               be delivered to the staff more than 120 days from
               the date of this Order;

     H.   MCH shall provide notice disclosing the material terms
of this Order, in a form acceptable to the staff of the
Commission, to all of its current customers, within thirty (30)
days from the date of this Order.  Within forty-five (45) days of
the date of this Order, MCH shall submit an affidavit to the
staff of the Commission certifying MCH's compliance with this
Paragraph V.H.

     I.  MCH shall provide notice disclosing the material terms
of this Order, for a period of one (1) year from the date of this
Order, in a form acceptable to the staff of the Commission, to
all of its prospective customers, not less than twenty-four (24)
hours prior to executing any orders for the purchase or sale of
securities on behalf of the prospective customers.  Within one
(1) year from the date of this Order, MCH shall submit an
affidavit to the staff of the Commission certifying MCH's
compliance with this Paragraph V.I.



     By the Commission.




                                             Jonathan G. Katz
                                             Secretary            


























                   
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