UNITED STATES SECURITIES AND EXCHANGE COMMISSION

     LITIGATION RELEASE NO. 15799 / July 6, 1998

     SECURITIES AND EXCHANGE COMMISSION v. FRANK J. PAPSON
     USDC/SD NY 98-CV-4748

          On July 6, 1998, the Commission filed a civil insider trading case in
     the Southern District of New York against Frank J. Papson, a former vice
     president of Xerox Corporation s (Xerox) Office Document Products Group
     (ODPG).  Simultaneously with the filing of the Complaint, Papson consented
     to the entry of a Final Judgment on a neither admit nor deny basis, which
     imposes an injunction against future violations of the antifraud provisions
     of the federal securities laws and requires Papson to disgorge $35,593.98,
     representing the profits he made by trading in Xerox stock and options
     while in possession of material non-public information.  The agreed Final
     Judgment also orders Papson to pay prejudgment interest of $4,493.62 and a
     civil penalty of $35,593.98.

          According to the Complaint, Papson was responsible for consolidating
     and reporting ODPG s financial results, which historically produced
     approximately 50 percent of Xerox s total revenue.  The Complaint alleged
     that on or about October 7, 1996, Papson learned that ODPG s total profit
     for the 1996 third quarter was down $59 million or thirty-four percent
     below the same year-ago period and that, with this knowledge, he sold short
     1650 shares of Xerox common stock and purchased 65 Xerox put options
     between October 7 and October 15. 

          On October  18, 1996, Xerox publicly announced a two percent decline
     in its 1996 third quarter earnings from the 1995 third quarter.  According
     to the Complaint, the 1996 third quarter results were well below analysts 
     expectations for Xerox, which had previously posted increased earnings for
     12 preceding quarters.  After the disappointing earnings announcement, the
     price of Xerox stock dropped $8.25, or fourteen percent, and Papson covered
     his short sale of Xerox stock and sold his Xerox put options for a profit
     of  $35,593.98.  As a result of his trading, the Complaint alleged that
     Papson violated Section 17(a) of the Securities Act of 1933 and Section
     10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.















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