FOR IMMEDIATE RELEASE                                  99-37

         Securities And Exchange Commission Settles
          Municipal Finance Case With Lazard Frères
                              
              Lazard Agrees to Pay $11 Million
                              
     Washington, D.C., April 22, 1999 -- The Securities and
Exchange Commission today announced an $11 million
settlement with Lazard Frères and Co. LLC -- a private
investment bank based in New York -- in a case involving
breach of fiduciary duty and the charging of excessive
markups by Lazard.  The Commission's settlement with Lazard
is part of the first comprehensive federal government
resolution with a major Wall Street firm involving the
practice known as "yield burning."  In the Commission's
action, Lazard consented to the entry of an administrative
order and agreed to pay a total of $11 million to resolve
the Commission's action and a related civil claim filed by
the United States.  The $11 million payment consists of a
$7,451,251 payment to the U.S. Treasury and a total of
$3,548,749 paid directly to five municipal issuers.

     In the related civil matter, the United States Attorney
for the Southern District of New York and the Department of
the Treasury today announced jointly that the United States
had intervened in, and settled, a lawsuit filed against
Lazard under the False Claims Act.  That portion of the
overall settlement provides that Lazard will pay $7,451,251
to the United States to resolve Lazard's False Claims Act
liability for specified municipal refunding bond
transactions as well as to resolve certain claims of the
Internal Revenue Service.  As a result, no payment will be
required of any issuer of the municipal bonds covered by the
settlement and the tax-exempt status of those bonds will be
preserved.

     "This is another important step in our continuing
effort to clean up the municipal securities market.  The
practices identified in today's action harmed investors,
issuers of municipal securities and the federal government.
I'm particularly pleased that the settlement with Lazard
protects innocent issuers and bondholders.  I expect other
firms that engaged in these practices will also take
responsibility and offer similar resolutions," said Arthur
Levitt, Chairman of the Securities and Exchange Commission.

     The settled SEC order charges Lazard with securities
fraud.  According to the allegations in the order, Lazard
breached its fiduciary duty to one of its financial advisory
clients in New Jersey, the Passaic Valley Sewerage
Commissioners, by failing to make necessary disclosures
during an advance refunding of Passaic Valley's bonds in
1992.  The Commission further alleges that Lazard sold
Treasury securities to Passaic Valley at excessive,
undisclosed markups in connection with that refunding.
Without admitting or denying the order's findings, in
settlement Lazard agreed to be censured and to cease and
desist from future violations of the antifraud provisions of
the federal securities laws.  As part of the global
settlement of the two cases, Lazard agreed to pay an
aggregate amount of $11 million.

     The $7,451,251 payment to the United States Treasury
relates to the practice commonly known as "yield burning."
As the Commission's order explains, when municipalities wish
to refinance their outstanding bonds, they often engage in
an advance refunding.  In an advance refunding, the
municipality issues new "refunding" bonds and invests the
proceeds in a portfolio of U.S. Treasury securities
structured to pay the obligations on the old bonds.  To
prevent abuse of the benefit the federal government gives
municipalities by not taxing interest paid on municipal
bonds, federal law limits the yield the issuer can earn on
Treasury securities bought for refundings.  A dealer that
overcharges the issuer for Treasury securities diverts money
to itself at the expense of the U.S. Treasury (or,
sometimes, at the expense of the issuer).  Diversion of
money away from the Treasury is known as yield burning
because the overcharge has "burned" the yield down to the
yield limitation.  If yield burning occurs, holders of the
new refunding bonds can be required to pay federal income
tax on the bond interest they receive.

     In addition to the $7,451,251 payment to the United
States, as part of the settlement, Lazard agreed to make the
following payments:

     *    $447,374 to Passaic Valley
     *    $305,421 to Pittsburgh, Pennsylvania
     *    $1,355,719 to Seattle, Washington
     *    $218,240 to Indianapolis, Indiana
     *    $1,221,995 to the City of Indianapolis Public
          Improvement Bond Bank

These payments relate to sales of Treasury securities by
Lazard in connection with advance refundings.

     The Commission thanks the United States Attorney for
the Southern District of New York, the Department of
Justice, the Department of the Treasury and the Internal
Revenue Service for their cooperation in this matter.

     The Commission's investigation into yield-burning and
related practices by other dealers continues.

     Details of the Commission's enforcement actions can be
found on its website at http://www.sec.gov.

For further information, contact:

William R. Baker III, at (202) 942-4570
Associate Director, Division of Enforcement

Kathleen M. Hamm, at (202) 942-4637
Assistant Director, Division of Enforcement