UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 15159 / November 19, 1996

Securities and Exchange Commission v. Teresa V. Fernandez
(S.D.N.Y.)
96 Civ. 8702 (JES)

On November 19, 1996, the Commission filed a Complaint charging
that Teresa V. Fernandez, an investment adviser, misappropriated
over $64 million in client funds, using forgeries and falsified
instructions to broker-dealers.  

     The Complaint alleges as follows:  

     Fernandez, age 49, operated a registered investment advisory
firm, Wharton Investments, Inc., from her home in Tenafly, New
Jersey.  Her clients were mostly wealthy residents of the
Philippines, many of whom were relatives and family friends. 
They entrusted a total of over $100 million to Fernandez's
management.  Fernandez placed client funds in brokerage accounts
at Shearson Lehman Hutton Inc. from 1986 to 1990 and, from mid-
1990 onward, at Bear Stearns & Co.  Fernandez had authority to
buy and sell securities in these accounts, but did not have
authority to withdraw funds or securities from the accounts.

     Beginning in 1990, Fernandez ensured that her clients would
not receive brokerage statements revealing the true status of
their accounts by submitting forged letters to Bear Stearns
directing that the statements be sent to her own home, and to her
mother's home in the Philippines.  From September 1990 through
March 1995, Fernandez created and distributed fake Bear Stearns
statements that reported securities trades that had not in fact
occurred in the accounts.  These statements, and Fernandez's own
quarterly statements to clients, reported net equity that
exceeded the true account balances by 50% to 90%.

     From December 1986 through September 1995, Fernandez stole
at least $64,036,612 by submitting falsified Letters of
Authorization directing that the broker-dealers transfer client
funds to accounts under Fernandez's own control.  Fernandez
distributed the misappropriated funds to various persons and
entities, including previously defrauded clients, many of whom
were her relatives and friends.  Fernandez used certain of the
funds to cover client withdrawal requests that exceeded the true
value of the pertinent client accounts.  Fernandez also
improperly charged her advisory clients approximately $1,500,568
in performance fees.

     The Complaint, filed in the U.S. District Court for the
Southern District of New York, charges violations of Section
17(a) of the Securities Act of 1933, Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and
Sections 206(1), 206(2), and 206(4) of the Investment Advisers
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Act of 1940.  Without admitting or denying the allegations of the
Complaint, Fernandez consented to be permanently enjoined from
violations of these provisions.  The Complaint also seeks an
order directing that Fernandez disgorge her illegal gains, plus
prejudgment interest thereon, and pay civil money penalties
pursuant to the Securities Enforcement Remedies and Penny Stock
Reform Act of 1990.