UNITED STATES OF AMERICA
                                     Before the 
                         SECURITIES AND EXCHANGE COMMISSION 



     INVESTMENT ADVISERS ACT OF 1940
     Release No. 1644 / July 18, 1997

     ADMINISTRATIVE PROCEEDING 
     File No.3-9348

                                        
                                        :    ORDER INSTITUTING PUBLIC
          In the Matter of              :    PROCEEDINGS PURSUANT TO 
                                        :    SECTIONS 203(e) AND 203(k)
     LBS CAPITAL MANAGEMENT, INC.,      :    OF THE INVESTMENT ADVISERS
                                        :    ACT OF 1940, MAKING               
     Respondent.                   :    FINDINGS AND IMPOSING
                                        :    REMEDIAL SANCTIONS AND
                                        :    CEASE-AND-DESIST ORDER 

                                          I.

          The Securities and Exchange Commission ("Commission") deems it
     appropriate and in the public interest that public administrative and
     cease-and-desist proceedings be instituted against LBS Capital Management,
     Inc. (the "Adviser") pursuant to Sections 203(e) and 203(k) of the
     Investment Advisers Act of 1940 (the "Advisers Act").

          In anticipation of the institution of these proceedings, the Adviser
     has submitted an Offer of Settlement (the "Offer") which the Commission has
     determined to accept.  Solely for the purpose of these proceedings and any
     other proceedings brought by or on behalf of the Commission or to which the
     Commission is a party, and without admitting or denying any of the findings
     contained herein, except as to the jurisdiction of the Commission over it
     and over the subject matter of these proceedings, which is admitted, the
     Adviser consents to the entry of this Order Instituting Public Proceedings
     Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of
     1940, Making Findings and Imposing Remedial Sanctions and Cease-and-Desist
     Order (the "Order") by the Commission.

          Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to
     Sections 203(e) and 203(k) of the Advisers Act be, and hereby are,
     instituted.





                              ======END OF PAGE 1======






                                         II.

          On the basis of this Order and the Adviser's Offer, the Commission
     finds that:

          1.   The Adviser is a Florida corporation with offices located in
     Clearwater, Florida.  The Adviser has been registered with the Commission
     as an investment adviser since July 16, 1986.  The Adviser is a
     quantitative money management firm that uses multiple investment management
     computer systems to select stocks and mutual funds and to generate trading
     signals.  The Adviser has approximately 5,000 clients, two-thirds of whom
     are retail clients, and manages approximately $600 million in assets.

          2.   The Adviser advertises its services primarily through mailings to
     registered representatives and principals of broker-dealer firms.  In
     addition, the Adviser publishes advertisements in trade journals and
     similar publications, and occasionally disseminates advertisements directly
     to prospective clients.

          3.   In 1994, the Adviser generated and developed "MAXIMIZER," a
     mutual fund timing and selection service,<(1)> by using historical
     financial data from the period 1983 through 1986.  The Adviser then tested
     the quantitative validity of MAXIMIZER by applying it retroactively to a
     different period of time, from 1987 through 1993, and thereby derived
     simulated performance results for MAXIMIZER for those years.<(2)>  The
     Adviser offered MAXIMIZER only to its retail clients and prospective retail
     clients beginning in January 1994.  The Adviser did not offer MAXIMIZER to
     any institutional clients or prospective institutional clients.

          4.   During May through September 1994, the Adviser distributed a
     printed advertisement to retail broker-dealers, existing retail clients,
     and to prospective retail clients who requested information about
     MAXIMIZER.  The advertisement contained the "model" or simulated
     performance results for MAXIMIZER.  The advertisement disclosed in a
     footnote that (a) the results were "pro-forma"; (b) "model" performance was
     "no guarantee of future results"; (c) MAXIMIZER "went live" in January

                              

          <(1)>  In MAXIMIZER,  the Adviser invests its clients'  monies in
          three of  17 unaffiliated, no-load  equity mutual funds  based on
          timing signals  received from  the Adviser's market  timing model
          called  "OMNI."  Generally, when  OMNI registers a "sell" signal,
          the fund shares are redeemed and the proceeds are reinvested into
          a money market fund;  when OMNI registers a "buy"  signal, client
          monies are reinvested equally in three equity mutual funds.

          <(2)>  This process is known as "out-of-sample" testing.  In such
          a  test,   a  quantitatively  derived  model   is  created  using
          historical data  from a sample period of  time (also known as the
          "in-sample"  period).  The model is then applied retroactively to
          a  subsequent  period of  time  (the  "out-of-sample" period)  to
          determine the  quantitative validity of  the model and  to derive
          simulated performance results.  






     1994; and (d) "actual results" were "available upon request."<(3)>

          5.   Under these particular facts and circumstances, the advertisement
     was materially misleading because it failed to disclose with sufficient
     prominence or detail that the advertised performance results of MAXIMIZER
     did not represent the results of actual trading using client assets but
     were achieved by means of the retroactive application of a model.

          6.   In concluding that the advertisement was materially misleading,
     the Commission also has considered the fact that the advertisement was
     distributed by the Adviser to retail clients and prospective retail clients
     without regard for their investment sophistication or acumen.  As the
     Commission previously has stated:

          In appraising advertisements [by investment advisers] such as
          those now before us we do not look only to the effect that they
          might have had on careful and analytical persons.  We also look
          to their possible impact on those unskilled and unsophisticated
          in investment matters.

     In the Matter of Spear & Staff, Inc., Investment Advisers Act Release No.
     188 (March 25, 1965); see also SEC v. C.R. Richmond & Co., 565 F.2d 1101,
     1104 (9th Cir. 1977) (an adviser's advertising "must be measured from the
     viewpoint of a person unskilled and unsophisticated in investment
     matters").  Thus, although the advertisement disclosed in a footnote that
     the advertised results were "pro-forma" and that "actual results" were
     available upon request, that disclosure, under the facts and circumstances
     of this case, was inadequate to (a) convey that the advertised performance
     results of MAXIMIZER were achieved by means of the retroactive application
     of a model, or (b) dispel the misleading suggestion of the advertisement
     that the advertised performance results represented the results of actual
     trading.  Cf. In the Matter of Jesse Rosenblum, Investment Advisers Act
     Release No. 913 (May 17, 1984) (an investment adviser's advertisement that
     contained materially misleading statements was "not cured by the
     disclaimers buried in the [smaller print] text [of the advertisement]").

          7.   By reason of the foregoing, the Adviser willfully  violated,
     committed, or caused the violation of Section 206(4) of the Advisers Act
     and Rule 206(4)-1(a)(5) thereunder, in that, by use of the mails or any
     means or instrumentality of interstate commerce, directly or indirectly,
     the Adviser engaged in acts, practices, or courses of business which were
     fraudulent, deceptive or manipulative by, directly or indirectly,
     publishing, circulating, or distributing an advertisement which was
     misleading.

                                         III.
                              

          <(3)>     The advertisement stated  that the performance  results
          of  MAXIMIZER  were "calculated  on  a  time-weighted basis  with
          reinvestment  of dividends  and capital  gains plus  returns from
          cash."

                              ======END OF PAGE 3======






          On the basis of the foregoing, the Commission deems it appropriate and
     in the public interest to impose the sanctions and cease and desist order
     specified in the Offer submitted by the Adviser, and to order the Adviser
     to comply with its undertakings contained in the Offer.  In determining to
     accept the Adviser's Offer, the Commission considered remedial acts
     undertaken and to be undertaken by the Adviser and cooperation afforded the
     Commission staff.

          ACCORDINGLY, IT IS HEREBY ORDERED THAT:

          1.   Pursuant to Section 203(k) of the Advisers Act, the Adviser shall
     cease and desist from committing or causing any violation or future
     violation of Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5)
     thereunder;

          2.   Pursuant to Section 203(i) of the Advisers Act, the Adviser
     shall, within fifteen (15) days from the entry of this Order, pay a civil
     money penalty in the amount of twenty-five thousand dollars ($25,000) to
     the United States Treasury.  Such payment shall be: (a) made by United
     States postal money order, certified check, bank cashier's check, or bank
     money order; (b) made payable to the "Securities and Exchange Commission,"
     (c) mailed to the Comptroller, Securities and Exchange Commission, Mail
     Stop 0-3, 450 Fifth Street, N.W., Washington, D.C. 20549; and (d) submitted
     under cover letter that specifies LBS Capital Management, Inc. as the
     Respondent in these proceedings, the file number of these proceedings, a
     copy of which cover letter and money order or check shall be sent to
     Russell C. Weigel III, Branch Chief, Securities and Exchange Commission,
     Southeast Regional Office, 1401 Brickell Avenue, Suite 200, Miami, Florida
     33131;

          3.   The Adviser shall comply with its undertaking to retain an
     independent consultant or attorney familiar with the Advisers Act
     ("Consultant"), who is not unacceptable to the staff of the Commission, to
     review, for a period of two years following the entry of this Order, all of
     the Adviser's performance advertisements, prior to their publication,
     circulation or distribution, for compliance with the Advisers Act;

          4.   The Adviser shall comply with its undertaking to obtain from the
     Consultant, within 60 days from the date of this Order, such
     recommendations for the implementation, modification or retention of such
     practices and procedures as the Consultant shall deem appropriate to ensure
     future compliance with the provisions of











                              ======END OF PAGE 4======






     Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder; and

          5.  The Adviser shall comply with its undertaking to implement and
     maintain all such practices and procedures recommended by the Consultant,
     provided that if the Adviser thereafter determines to modify such practices
     and procedures, it may do so only if the Consultant first determines that
     such modifications are designed to ensure the Adviser's compliance with
     Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder.   

          By the Commission.




                                   Jonathan G. Katz
                                   Secretary





































                              ======END OF PAGE 5======