UNITED STATES SECURITIES AND EXCHANGE COMMISSION

          Litigation Release No. 16046 / January 26, 1999

          SECURITIES AND EXCHANGE COMMISSION v. HONG LU AND CHI-LIN TOM, ET
          AL.  United  States  District  Court for the Northern District of
          California, No. 99-9289 (MHP).

               The Securities and Exchange Commission ("SEC") and the U.S.
          Attorney’s Office for the Northern District of California today
          announced the filing of separate civil and criminal actions
          against two former employees of Advanced Fibre Communications,
          Inc. ("Advanced Fibre"), a manufacturer of telecommunications
          components based in Petaluma, California.  The actions stem from
          the former employees’ alleged insider trading in Advanced Fibre
          options in June and July of 1998.  The complaint and criminal
          indictment allege that the employees netted more than $327,000 in
          illegal profits.

               Named as defendants in the two actions are: Chi-lin Tom, 45,
          who was Advanced Fibre’s Director of Design Verification and
          Testing at the time of the alleged illegal trading; and Hong Lu,
          27, who was then an Advanced Fibre engineer.  Also named as a
          relief defendant in the SEC’s civil complaint is Hong Lu’s wife,
          Yi Lu, 27.  Mr. Tom and the Lus all reside in Rohnert Park,
          California.

               According to the allegations of the SEC’s civil complaint
          and the criminal indictment returned by a federal grand jury
          yesterday, Mr. Tom learned on June 29, 1998, that Advanced Fibre
          would soon publicly announce lower-than-expected revenues for the
          quarter ending June 30.  Mr. Tom and Mr. Lu agreed that Mr. Lu
          would trade Advanced Fibre securities so that both could profit
          from their inside information.

               The complaint and indictment further allege that beginning
          at 6:30 a.m. on June 30, Mr. Lu spent approximately $15,500 to
          purchase 200 put option contracts on Advanced Fibre stock for
          himself and Mr. Tom.  At the time, Advanced Fibre stock was
          trading for approximately $40 per share.  The options contracts,
          which expired on July 18, 1998, would only be profitable if the
          stock price fell below $35 per share.

               According to the complaint and indictment, after the market
          closed for trading on June 30, 1998, Advanced Fibre issued an
          early-warning announcement that its revenues and earnings for the
          quarter ended June 30 would be lower than expected.  Advanced
          Fibre stock fell more than 55 percent to $18 per share on July 1.

               The complaint and indictment allege that after the price of
          Advanced Fibre stock fell, on July 1 Mr. Lu sold the 200 put
          option contracts and realized net profits of approximately
          $327,000.

               In its civil complaint, the SEC charges Mr. Lu and Mr. Tom
          with securities fraud based on their illegal insider trading, in
          violation of Section 10(b) of the Securities Exchange Act of 1934
          and Rule 10b-5 thereunder.  The complaint seeks to compel the two
          men to disgorge their illegal trading profits plus prejudgment
          interest.  The complaint also seeks civil penalties of up to
          three times the trading profits against each man.  In addition,
          the complaint seeks to enjoin Mr. Lu and Mr. Tom from future
          violations of the federal insider trading laws.

               The criminal indictment charges Mr. Lu and Mr. Tom with one
          count of conspiracy (in violation of 18 U.S.C Section 371), one
          count of securities fraud (in violation of 15 U.S.C. Sections
          78(j) and 78(h)), and two counts of mail fraud (in violation of
          18 U.S.C. Section 1341), each relating to the alleged illegal
          insider trading by the two men.  In addition, the indictment
          charges each man with four counts each of making false statements
          to the SEC and one count each of obstruction of justice (in
          violation of 18 U.S.C. Sections 1001 and 1505), based on Mr. Lu’s
          and Mr. Tom’s allegedly false testimony under oath before the SEC
          during its investigation.