For Immediate Release                             99-15

      In First Case of Its Kind, SEC Charges Brokerage Firm
  and Its President With Aiding and Abetting Soft Dollar Fraud

     San Francisco, CA, February 10, 1999 -- In the first action
of its kind, the Securities and Exchange Commission today brought
and settled charges against a New York securities firm and its
president for aiding and abetting a San Francisco investment
adviser's fraudulent misappropriation of soft dollar benefits
from its advisory clients.

     The Commission found that Republic New York Securities
Corporation ("Republic Securities"), a New York broker-dealer,
and Republic Securities' President, James Edward Sweeney, a New
Jersey resident, willfully aided and abetted soft dollar fraud by
Sweeney Capital Management, Inc. ("SCM"), an investment adviser
formerly located in San Francisco.  Republic Securities and James
Sweeney agreed to pay penalties of $50,000 and $25,000,
respectively, to be censured, and to cease and desist from future
violations of applicable securities laws.  They did not admit or
deny the Commission's findings.

     Richard H. Walker, Director of the Division of Enforcement,
said, "This case demonstrates that brokers can't turn a blind eye
to fraudulent soft dollar practices of investment advisers."

     Soft dollar benefits or credits, also referred to as "soft
dollars," are rebates from a brokerage firm generated when an
investment adviser directs securities trades for its clients
through the brokerage firm.  In this case, Republic Securities
provided SCM with a $1.00 soft dollar credit for every $1.75 of
brokerage commissions generated by Republic from trades placed by
SCM for its advisory clients.  Because the advisory clients pay
the commissions, soft dollars are assets of the adviser's
clients.  Advisers, who act as fiduciaries for their clients, are
required by law to disclose to clients how they use soft dollars.

     In its Order, the Commission found that between May 1994 and
April 1995, Republic Securities and James Sweeney rebated
approximately $84,000 in soft dollar benefits to or on behalf of
SCM.  During this period, however, SCM and its principals
misappropriated soft dollars from their advisory clients by
purchasing and selling securities without disclosing the fact
that they used the clients' soft dollar benefits for their own
personal expenses and for overhead expenses.  Republic Securities
paid for, and James Sweeney approved, a variety of SCM's business
and personal expenses, including telephone bills, marketing
expenses, accounting and legal bills, furniture, rent, parking,
office supplies, and client gifts, all with the advisory clients'
soft dollars.  In addition, Republic Securities made payments
with soft dollars to purported consultants based on phony
invoices submitted by SCM.

     The Order states that Republic Securities and James Sweeney
aided and abetted SCM's fraudulent conduct by processing SCM's
trades and paying its soft dollar invoices without inquiry in the
face "red flags" that suggested that SCM may have been engaged in
an illegal course of conduct.  These red flags included the fact
that a high percentage of invoices submitted by SCM on their face
were for SCM's overhead expenses, that Republic Securities
forwarded all soft dollar payments directly to SCM instead of
paying third party vendors directly, that certain SCM invoices on
their face contained indications of fraud, and that Republic
Securities frequently made payments to or on behalf of SCM
without documentation that SCM actually incurred certain
expenses.

     On March 10, 1998, the Commission filed a complaint in the
Northern District of California against SCM and its principals
alleging fraudulent misconduct, including fraud relating to its
soft dollar operations.  That action is pending.

     Examinations conducted during the Commission's soft dollar
sweep, which occurred from winter 1996 through spring 1997,
contributed to this case.  For additional information on soft
dollars, please see the September 1998 Inspection Report on the
Soft Dollar Practices of Broker Dealers, Investment Advisers and
Mutual Funds by the Commission's Office of Compliance Inspections
and Examinations.  The report can be found on the Commission's
website at http://www.sec.gov/news/studies/softdolr.htm.

Contacts:

David B. Bayless
District Administrator
(415) 705-2444
or
Helane L. Morrison
Assistant District Administrator
(415) 705-2450

San Francisco District Office
Securities and Exchange Commission
(415) 705-2500

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