SECURITIES AND EXCHANGE COMMISSION
                                   Washington, D.C.

     Securities Act of 1933 Release No. 7429 / July 1, 1997
     Securities Exchange Act of 1934 Release No. 38801 / July 1, 1997
     Accounting and Auditing Enforcement Release No. 934 /July 1, 1997

     In the Matter of Paul Y. Okuda, Stephen A. Thorpe, and David J. Chester,
     Administrative Proceeding File No. 3-9345

          On July 1, 1997 the Commission instituted administrative and cease-
     and-desist proceedings against Paul Y. Okuda, Stephen A. Thorpe and David
     J. Chester.  In the Order, the Division of Enforcement alleges that, during
     early 1992, Ronald Moskowitz, the former Chief Executive Officer and
     Chairman of the Board of Directors of Ferrofluidics Corporation, and Jan R.
     Kirk, Ferrofluidics' former Chief Financial Officer, devised a scheme to
     create the false appearance that the company had sold 620,000 shares of
     stock.  The Division alleges that Moskowitz and Kirk recruited Okuda,
     Thorpe, Chester and another individual to act as nominal buyers until the
     shares could be registered and sold to bona fide investors.  Okuda, Thorpe
     and Chester each signed a subscription agreement, a promissory note and a
     pledge agreement.  However, none of them paid for the Ferrofluidics stock,
     nor did they have the financial ability to pay for the shares. 
     Ferrofluidics publicly announced on April 23, 1992 that it had "$12,000,000
     of added capital" as a result of the private placement.  Okuda and Thorpe
     each received payments from Ferrofluidics for their participation in the
     scheme. 

          The Division alleges that Okuda, Thorpe and Chester never made any
     payments on their notes.  Ferrofluidics nonetheless booked interest on the
     notes as a receivable and thereby increased Ferrofluidics' reported net
     income by approximately 17% during fiscal 1992 and 22% during the first
     quarter of fiscal 1993.  At Ferrofluidics' request, Okuda and Chester
     falsely confirmed to the company's outside auditors during the 1992 audit
     that they owed Ferrofluidics the amount payable under their respective
     notes.  In May 1992, when 250,000 of shares nominally held by Thorpe and
     another nominal buyer were resold, Moskowitz instructed the company's
     controller to establish a sham commissions payable account.  That account
     was used to offset the shortfall between the cash proceeds from the sale of
     the shares and the amounts due under the notes.  

          The Division also alleges that from September to December 1992,
     Chester, for commissions, assisted Ferrofluidics in selling 365,000 shares
     of stock.  Chester was not registered with the Commission as a broker-
     dealer at the time.


          The Division alleges that Okuda and Chester violated or caused, and
     willfully violated, aided, abetted, counseled, commanded, induced or
     procured, and Thorpe violated or caused, violations of Section 17(a) of the
     Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5
     thereunder.  The Division also alleges that Chester willfully violated
     Section 15(a) of the Exchange Act.  The Division seeks disgorgement and
     prejudgment interest against all three respondents and civil money







     penalties and administrative sanctions pursuant to Section 15(b)(6) of the
     Exchange Act against Okuda and Chester.

          A hearing will be held before an administrative law judge to determine
     if the allegations are true and if true, what if any remedial relief is
     appropriate and in the public interest.

          In a related settled cease-and-desist proceeding (In the Matter of
     Helen T. Chalut and Saleem Noorani, Administrative Proceeding File No. 3-
     9344), the Commission finds that Chalut and Noorani caused violations of
     Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and
     Rule 10b-5 thereunder.  That Order also finds that Noorani violated Section
     15(a) of the Exchange Act.  Without admitting or denying the allegations in
     the Order, Chalut and Noorani have each consented to cease and desist from
     committing or causing any violations of these provisions, and to pay
     disgorgement of $21,000 and $65,000, respectively.





































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