UNITED STATES SECURITIES EXCHANGE COMMISSION

SECURITIES ACT OF 1933
RELEASE NO. 7874 / July 18, 2000

SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 43046 / July 18, 2000

INVESTMENT ADVISERS ACT OF 1940
RELEASE NO. 1887 / July 18, 2000

INVESTMENT COMPANY ACT OF 1940
RELEASE NO. 24559 / July 18, 2000

ADMINISTRATIVE PROCEEDING
File No. 3-10253

The Commission has instituted public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933, Sections 15(b)(6), 19(h) and 21C of the Securities Exchange Act of 1934, Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940 against Vector Index Advisors, Inc. (Vector) and Steven H. Adler (Adler). Vector is located in Tampa, Florida and has been registered with the Commission as an investment adviser since 1990. The proceedings are based upon allegations that from at least 1994 through 1998, Vector and Adler fraudulently told 13 Vector clients that pursuant to a market-timing program, Vector would purchase and sell for their accounts shares in a mutual fund, ASM Index 30 Fund, Inc. (ASM). In the Order, the staff alleges that from at least 1994 through 1998, Adler and Vector furnished fictitious account statements to the clients to create the appearance that they were operating the market-timing program by purchasing and selling ASM shares for the clients' accounts, and that those accounts were increasing in value. In the Order, the staff contends that, contrary to the representations and the information in the account statements, Vector and Adler diverted over $2.2 million of the clients' funds by using them, without the clients' authorization or knowledge, to pay Vector's business expenses and Adler's personal expenses. The staff claims in the Order that the respondents willfully violated the antifraud provisions of the federal securities laws.

The staff also alleges in the Order that, during the period from 1994 through 1998, Vector, aided and abetted and caused by Adler, failed to make and maintain in an accurate and current condition, as required of investment advisers, certain records concerning the market-timing clients. Finally, the staff alleges in the Order that Vector and Adler omitted material facts concerning the market-timing clients that were required to be stated in certain reports filed with the Commission.

A hearing will be scheduled to determine whether the staff's allegations are true, and if so, whether remedial sanctions and penalties should be imposed against Vector and Adler.

http://www.sec.gov/litigation/admin/33-7874.htm