FOR IMMEDIATE RELEASE                           2001-148


  SEC REVOKES REGISTRATION OF REPUBLIC NEW YORK SECURITIES
 CORP., A BROKER-DEALER PLEADING GUILTY TO SECURITIES FRAUD
                 IN RELATED CRIMINAL ACTION

     Washington, DC, December 17, 2001 - The Securities and
Exchange Commission announced today that it has issued an
Order revoking the registration of Republic New York
Securities Corp., a New York-based broker-dealer registered
with the Commission since 1992.  Republic Securities is now
a subsidiary of HSBC USA, formerly Republic New York
Corporation.

     The Commission found that Republic Securities violated
federal securities laws by participating in a massive Ponzi
scheme operated by Martin Armstrong.  In September 1999, the
Commission charged Armstrong and two companies he
controlled, Princeton Economics International and Princeton
Global Management, in an emergency action alleging that they
defrauded scores of Japanese companies that had invested
billions of dollars in Princeton Global Management notes.
Armstrong, who was indicted by a federal grand jury in New
York, was also charged by the Commodity Futures Trading
Commission.

     In the parallel criminal proceeding, the Office of the
United States Attorney for the Southern District of New York
today announced a guilty plea by Republic Securities.  As
part of the resolution of the criminal case, Republic
Securities has agreed to pay $606 million in restitution to
defrauded investors.   The Commodity Futures Trading
Commission also announced a related enforcement action
against Republic Securities today.  In settling the
Commission’s enforcement action, Republic Securities neither
admitted nor denied the Commission’s findings.

     The Commission found that from 1995 through 1999
Republic Securities engaged in a fraudulent scheme involving
hundreds of accounts opened by Armstrong at Republic
Securities for investors’ funds.  As set forth in the Order,
which is available on the Commission’s website, the
Commission found:

  ·    The Princeton Global Management notes were marketed in
     Japan as safe investments, handled by a successful
     commodities trader.  According to sales materials provided
     to investors, their funds would be secure in segregated
     accounts maintained at a broker-dealer affiliated with a
     prominent, well-capitalized bank, then known as Republic
     National Bank.

  ·    In truth, Armstrong was far from successful, losing
     over a half-billion dollars of investors’ funds in risky
     commodities trading.  Despite his poor performance,
     Armstrong paid himself huge management and performance fees,
     buying valuable gold treasures and a broker-dealer in Tokyo
     with investors’ funds.

  ·    Republic Securities, acting by and through its
     President, and the President of its Futures Division, was an
     active participant in Armstrong’s fraudulent scheme.
     Specifically, Republic Securities:

       o    Provided Armstrong with over 200 letters, the majority
          of which materially overstated the Net Asset Value of
          account balances relating to investors’ funds;

       o    Entered into “fiduciary agreements” with issuers of
          the Princeton Global Management notes which were used
          by Armstrong to assure investors that Republic
          Securities and Republic National Bank were safeguarding
          investors’ funds;

       o    Persuaded Armstrong to use accounts holding investors’
          funds as collateral for the huge negative balances in
          his trading accounts, and then to transfer cash balances
          to the trading accounts, thereby commingling investors’
          funds; and

       o    Provided Armstrong with false and misleading letters
          to Armstrong that he used to conceal the fraud from the
          Japanese Financial Supervisory Agency, which was
          investigating the notes in Japan.

  ·    By these fraudulent acts, Republic Securities directly
     committed securities fraud, in violation of Section 17(a) of
     the Securities Act, Section 10(b) of the Exchange Act and
     Rule 10b-5.

     The Commission revoked the firm’s registration as a
broker-dealer.  In recognition of the restitution paid by
the firm in the criminal case, which far exceeded the firm’s
profits from its handling of Armstrong’s account, and the
firm’s cooperation with the Commission’s investigation, the
Commission did not seek or obtain monetary sanctions from
the firm.  Separately, the Commission issued a temporary
order exempting Republic Securities’ new parent, HSBC, as
well as HSBC Asset Management from the provisions of Section
9(a) of the Investment Company Act.

     Wayne M. Carlin, Regional Director of the Commission’s
Northeast Regional Office, pointed to the significant
contributions of the U.S. Attorney’s Office for the Southern
District of New York, the Commodity Futures Trading
Commission, the Federal Bureau of Investigation, the Federal
Reserve Bank of New York and the Japanese Financial Services
Agency (“FSA”) in the coordinated investigations that
preceded today’s announcement.  “From the moment we learned
that the FSA had questioned NAV letters from Republic
Securities, we joined our fellow regulators to get to the
bottom of the problem.  With the FSA’s assistance, we were
able to overcome language and other barriers, and work
speedily with the CFTC to freeze existing funds at Republic
Securities.  It is truly gratifying to join with the U.S.
Attorney’s Office and the CFTC in announcing this
resolution.  The public interest is obviously served when
the victims of criminal conduct are compensated, without the
drain of expensive litigation.  Moreover, the historic size
of the restitution order stands as a warning to regulated
entities of the consequences that can ensue if they permit
their facilities to be misused in aid of wrongdoing.”

For further information, please contact:

Wayne M. Carlin
Regional Director
Northeast Regional Office
646-428-1510

Dorothy Heyl
Senior Trial Counsel
Northeast Regional Office
646-428-1758