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         UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 14787 /January 18 , 1996

Securities and Exchange Commission v. PaineWebber Incorporated, 
United States District for the Southern District of New York,  
96 Civ. 0331 (SHS)  

The Securities and Exchange Commission ("SEC") announced that the
Honorable Sidney Stein of the U.S. District Court for the
Southern District of New York today entered a Final Order against
PaineWebber Incorporated ("PaineWebber") pursuant to Section
21(e) of the Securities Exchange Act of 1934.  PaineWebber
consented to the Order without admitting or denying the
allegations contained therein.  The Final Order establishes a $40
million claims fund to be used to compensate purchasers of
public, proprietary direct investments sold by PaineWebber from
1986 to 1992.  The claims fund will be administered by an
independent claims administrator, to be appointed by the Court in
the next seven days.  Pursuant to the Order, PaineWebber is
required to pay $40 million into the claims fund and will also be
responsible for the cost of administering the claims fund. 

On January 18, 1996, the SEC issued an administrative order
charging PaineWebber with, among other things, violations of the
anti-fraud provisions of the federal securities laws in the
marketing and sale of limited partnership interests and other
"direct investments" from 1986 to 1992.  Simultaneously with the
institution of the administrative proceeding, and without
admitting or denying the findings contained therein, PaineWebber
consented to the entry of a SEC Order.  

The SEC Order finds, among other things, that from 1986 to 1992,
PaineWebber prepared and distributed sales and marketing
materials for four families of direct investments --
PaineWebber/Geodyne oil and gas programs, PaineWebber Insured
Mortgage Partners, PaineWebber/Independent Living Mortgage, and
Pegasus Aircraft Partners -- that overstated the benefits and
understated the risks of these investments, and characterized
these direct investments as suitable for conservative investors
without sufficiently disclosing the risk of loss of principal. 
In addition, PaineWebber sold direct investments to numerous
investors for whom they were unsuitable and in concentrations too
high given the investors' age, financial condition,
sophistication and investment objectives.  (see Securities Act of
1933 Release No. 7257)

In addition to other remedial sanctions, the order imposes:

     1.   a censure; 

     2.   a cease and desist order; 

     3.   a civil penalty of $5 million; and

     4.   the obligation that PaineWebber comply with its
     representation that it has paid and its obligation to pay a
     total of $292.5 million to investors as follows: 

          (a)  Individual claims:  By January 1997, PaineWebber
               will have paid an aggregate of $127.5 million to
               resolve individual investor claims relating to
               direct investments (PaineWebber has represented
               that it has already paid $120 million);

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          (b)  Class Actions:  PaineWebber has placed $125
               million into a separate account to settle two
               class actions relating to direct investments (if
               PaineWebber is unable to settle the class actions,
               these monies revert to the claims fund); and

          (c)  Claims Fund:  The establishment of a $40 million
               claims fund, to be administered by a Claims
               Administrator appointed by the Court.  
 
PaineWebber will provide notice and a claims form to the last
known address of each person known to have purchased one or more
of the direct investments covered by the Final Order by April 17,
1996.  The fund is not limited to purchasers of the four families
listed above, and any investor who purchased one or more public,
proprietary direct investments from PaineWebber between 1986 and
1992 may be eligible to seek compensation from the claims fund. 
To participate in the claims fund, an investor must submit a
claims form within six months of the date of the mailing of the
notice. 
The claims fund does not establish an exclusive remedy for
investors with valid claims against PaineWebber, or others,
relating to direct investments.