UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

Securities Exchange Act of 1934
Release No. 42106 / November 4, 1999

Administrative Proceeding
File No. 3-10091

____________________________________
                                    :
         In the Matter of           : ORDER INSTITUTING PUBLIC
                                    : ADMINISTRATIVE PROCEEDINGS
         LAWRENCE J. PENNA,         : AND OPINION AND ORDER
          HERMAN EPSTEIN and        : PURSUANT TO SECTION 15(b)(6)
          DOUGLAS J. MANGAN,        : OF THE SECURITIES EXCHANGE ACT
                                    : OF 1934                 
            Respondents.            :
                                    : 
____________________________________:            
            

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Lawrence J. Penna ("Penna"), Herman Epstein ("Epstein") and Douglas J. Mangan ("Mangan"), pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act").

In anticipation of the institution of the administrative proceedings, Penna, Epstein, and Mangan have each submitted an Offer of Settlement (the "Offers"), which the Commission has determined are in the public interest to accept. Solely for the purpose of this proceeding, and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, prior to a hearing and without admitting or denying the findings set forth herein, except as to jurisdiction and the issuance of the injunction set forth in Section IV.e, below, which they admit, Penna, Epstein and Mangan consent to the issuance of this Order Instituting Public Administrative Proceedings and Opinion and Order Pursuant to Section 15(b)(6) of the Exchange Act and to the entry of the findings and the imposition of the remedial sanctions as set forth below.

Accordingly, it is ordered that said proceedings be, and hereby are, instituted.

On the basis of this Order and the Offers, the Commission finds that:

a. Penna, formerly known as Lawrence Joseph Pennacchio, age 55, resides in New York City. During all relevant times, Penna was President and CEO of Investors Associates, Inc. ("Investors Associates"), and owned approximately 81% of the firm.

b. Epstein, age 58, resides in Franklin Lakes, New Jersey. During all relevant times, Epstein was the Chairman and Compliance Director of Investors Associates and owned approximately 14% of the firm.

c. Mangan, age 37, resides in Amityville, New York. During all relevant times, Mangan was a fifty percent owner of the Melville, New York branch office of Investors Associates.

d. During all relevant times, Investors Associates was a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act, with headquarters in Hackensack, New Jersey. At the relevant time, the firm had approximately seventeen branch offices and employed approximately 500 registered representatives. The firm ceased business, except for executing liquidating trades, on approximately June 12, 1997. Its corporate charter was revoked by the State of New Jersey on February 16, 1998, and its broker-dealer registration was canceled by the Commission on September 22, 1998.

e. On September 2, 1999, the Commission commenced a civil action against Penna, Epstein and Mangan, styled SEC v. Lawrence J. Penna, Herman Epstein and Douglas J. Mangan, 99 Civ. 9406 (S.D.N.Y.). In that civil action, on September 13, 1999, Penna and Epstein were permanently enjoined by the United States District Court for the Southern District of New York from violating Sections 5(a) and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 15(c) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rules 10b-3, 10b-5, 15c1-2, 15c1-8 and Regulation M, and Mangan was permanently enjoined from violating Sections 5(a) and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5. Penna, Epstein and Mangan consented to the injunctions without admitting or denying the allegations in the Complaint.

f. The Complaint alleged that Penna and Epstein had Investors Associates co-underwrite fraudulent public offerings of securities for five separate issuers betweeen September 1995 and February 1997, and manipulate the market in those securities, obtaining at least $33 million in illegal profits for Investors Associates. The fraudulent offerings alleged in the Complaint concerned Interiors, Inc., Compare Generiks, Inc., Perry's Majestic Beer, Inc., Decor Group, Inc. and Superior Supplements, Inc. Before each offering, Penna and Epstein had undisclosed arrangements to acquire for Investors Associates large blocks of deeply discounted stock from selling shareholders, who were nominees for, or participants in, the scheme. As the offering date approached, Penna and Epstein had Investors Associates' brokers solicit orders for the securities to be offered, knowing that neither the facts concerning their fraudulent scheme nor other material negative information concerning the issuers would be disclosed. Mangan oversaw the fraudulent activity at the Melville, New York branch office, Investors Associates' largest, most active, and most profitable office. He directed the brokers in that office to use a variety of other fraudulent and abusive sales practices to obtain orders for the securities to be offered. Immediately after each offering closed, Investors Associates and other broker-dealers coordinated their market-making activity to manipulate the apparent market price of the securities to a predetermined target level that was approximately twice the offering price. Investors Associates then filled, at the artificial price, the customer orders it had solicited before the offering, establishing a substantial short position. First, Epstein and Penna covered that position with the securities they had previously arranged to purchase from the selling shareholders at a deep discount. Then Penna and Epstein sold these securities at a substantial profit, but at a discount to the target price, from Investors Associates' principal trading account to trading accounts for the branch offices, including the Melville office.

g. Penna and Epstein purchased stock from selling shareholders which was penny stock within the meaning of Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

h. Mangan purchased stock from Investors Associates' principal trading account which was penny stock within the meaning of Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified by Respondents in their Offers.

Accordingly, it is hereby ordered, effective immediately, that Lawrence J. Penna, Herman Epstein and Douglas J. Mangan be, and hereby are, barred from being associated with a broker or dealer; and

It is further hereby ordered, effective immediately, that Lawrence J. Penna, Herman Epstein and Douglas J. Mangan be, and hereby are, barred from participating in an offering of penny stock.

By the Commission.

Jonathan G. Katz
Secretary