SECURITIES AND EXCHANGE COMMISSION

     Investment Advisers Act of 1940
     Release No.  1634 / May 28, 1997

     Investment Company Act of 1940
     Release No. 22685 / May 28, 1997

     Administrative Proceeding File Number 3-9317

          PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS INSTITUTED
          AGAINST PARNASSUS INVESTMENTS, JEROME L. DODSON, MARILYN CHOU AND
          DAVID GIBSON

          The Securities and Exchange Commission has instituted public
     administrative and cease-and-desist proceedings against:  (1) Parnassus
     Investments ("PI"), a registered investment adviser located in San
     Francisco, California, which acted as the investment adviser to the
     Parnassus Fund ("Fund), a mutual fund based in San Francisco; (2) Jerome L.
     Dodson ("Dodson"), President and Director of PI and President and a Trustee
     of the Fund; and, (3) Marilyn Chou ("Chou") formerly of Piedmont,
     California and David Gibson ("Gibson") of San Francisco, California, who
     were outside Trustees of the Fund (collectively, "Respondents").

          The Order Instituting Proceedings alleges three main violations of the
     federal securities laws.  First, PI, Dodson, Chou and Gibson aided and
     abetted and caused the Fund to overstate its Net Asset Value ("NAV") for
     over two years -- from December 1990 to January 1993 -- by failing to value
     in good faith the Fund's holding of Margaux, Inc. ("Margaux"), a thinly
     traded security.  The Order alleges that Respondents valued Margaux at the
     identical price for the entire two years and ignored relevant pricing and
     financial information about Margaux which should have led them to a lower
     valuation.  The overstated NAV caused redeeming shareholders to receive
     more than they were entitled to, thereby diluting the holdings of remaining
     shareholders, while purchasing shareholders paid more for Fund shares than
     what they were actually worth.  This violation also had the effect of
     increasing the compensation PI received as investment adviser to the Fund. 


          Second, the Fund had a fundamental investment policy not to make loans
     (except through repurchase agreements which are a type of short-term loan
     fully collateralized by the value of the security which the borrower
     transfers to the lender and agrees to repurchase).  In violation of this
     fundamental policy, PI and Dodson aided and abetted and caused the Fund to
     make a $100,000 loan to Margaux shortly after Margaux filed for bankruptcy. 


          Finally, PI improperly used the Fund's soft dollar credits -- received
     from the Fund's broker-dealer in return for routing the Fund's trades to
     that broker for execution -- for the benefit of PI instead of the Fund and
     its shareholders.  Dodson caused and aided and abetted PI's improper soft
     dollar use.  PI also filed Forms ADV with the Commission, executed by

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     Dodson, which failed to disclose PI's improper use of soft dollar credits. 


          A hearing will be scheduled to determine: (1) whether the Respondents
     violated the laws as alleged; (2) whether a cease-and-desist order should
     issue against the Respondents; and (3) whether civil penalties should be
     imposed upon the Respondents.














































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