UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Litigation Release No. 15166 / November 25, 1996

Securities and Exchange Commission v. Hyannis Trading Advisors,
Inc., et al. (D. Mass., No. 96-12367 (RCL))

     The Securities and Exchange Commission ("Commission")
announced today the filing of an injunctive action in the United
States District Court for the District of Massachusetts, against
Hyannis Trading Advisors, Inc. ("Hyannis Trading"), a registered
investment adviser, Jeremiah J. Hegarty ("J. Hegarty"), its
principal, and Michael P. Hegarty ("M. Hegarty"), J. Hegarty's
brother, in connection with their fraudulent inducement of
investors and subsequent losses of nearly all investor funds. 
The Complaint alleges that the defendants made materially false
statements that induced over 150 persons to invest over $7
million in a trading program created by J. Hegarty for trading in
Standard & Poor's 100 Index options.  The Complaint alleges that,
between October and December 1992, the defendants caused the loss
of all but $1.1 million of client funds under management, and
that these losses included losses in excess of account equity of
over $650,000 in the accounts of 21 clients.  The Complaint seeks
permanent injunctions, disgorgement and civil penalties.

     The Complaint alleges that the Hegartys solicited clients
for Hyannis Trading with materially misleading promotional
materials and verbal statements that misrepresented the principal
risk management features of the trading strategy and J. Hegarty's
past trading performance.  According to the Complaint, J. Hegarty
and M. Hegarty, who was a registered representative of a broker-
dealer at which most of Hyannis Trading's client accounts were
maintained, represented that Hyannis Trading's program included
trading safeguards -- such as risking only a portion of an
account's equity, making infrequent trades, engaging in hedging
strategies, and adhering to stop-loss instructions -- that would
limit the risk of loss in client accounts.  The Complaint alleges
that, between October 1 and December 31, 1992, J. Hegarty and M.
Hegarty disregarded these safeguards, and, without disclosure of
the changed trading strategy to clients, dramatically increased
the number, size, frequency and risk of the options trades.  The
Complaint alleges that the changed trading strategy resulted in
the defendants' execution of unsuitable trades for many Hyannis
Trading clients. 

     In addition, the Complaint alleges that Hyannis Trading, J.
Hegarty and M. Hegarty, variously, entered into investment
advisory contracts charging performance fees to all clients,
failed to file required annual reports with the Commission for
1994 and 1995, and failed to deliver Hyannis Trading's Form ADV
Part II or a brochure equivalent, which are required disclosure
documents, to clients.
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     The Commission charged that Hyannis Trading violated, and J.
Hegarty and M. Hegarty violated or aided and abetted violations
of the antifraud provisions of the federal securities laws, and
provisions and rules under Advisers Act governing performance
fees, promotional materials, delivery of Form ADV to clients, and
filing of other required reports; specifically, Section 17(a) of
the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 204,
205, 206(1), 206(2) and 206(4) of the Advisers Act and Rules 204-
1(c), 204-2(a)(3), 204-2(a)(14), 204-3(c)(1) and 206(4)-1(a)(5)
thereunder.
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