Securities and Exchange Commission

   Litigation Release No. 16304 / September 28, 1999

   Accounting and Auditing Enforcement Release No. 1174

   SECURITIES AND EXCHANGE COMMISSION V. ROBERT H. SUTTON, U.S. District
   Court for the Northern District of Illinois, Civil Action No. 99 C
   6342 (N.D. Ill. September 27, 1999)

   The Securities and Exchange Commission announced that on September 27,
   1999, it filed a Complaint for Permanent Injunction, Civil Penalties
   and Other Equitable Relief in the U.S. District Court for the Northern
   District of Illinois against Robert H. Sutton, a resident of Palatine,
   Illinois. The Complaint alleges that Sutton, at the time a plant
   controller for a unit of Material Sciences Corporation ("MSC"), a
   Delaware corporation based in Elk Grove Village, Illinois, violated
   the federal securities laws by making false entries in the company's
   inventory and accounts payable records. The Complaint alleges that, as
   a result of Sutton's false entries, MSC overstated by 29% the net
   earnings disclosed in its financial statements for the fiscal year
   ended February 29, 1996. The Complaint also alleges that the false
   entries caused MSC to overstate the net earnings disclosed on MSC's
   Forms 10-Q during fiscal years 1996 and 1997 by amounts ranging
   between 6.27% and more than 300%.

   According to the Complaint, between March 1, 1995, and February 28,
   1997, Sutton intentionally fabricated the inventory work in process
   and entered these values into the general ledger of MSC's Laminates
   and Composites unit. According to the Complaint, Sutton's fabrications
   falsely increased MSC's earnings by artificially inflating the book
   value of the unit's inventory on hand and understating the unit's cost
   of sales.

   The Complaint also alleges that from March 1, 1996, to February 28,
   1997, Sutton intentionally made false ledger entries for the Laminates
   and Composites unit's accounts payable. According to the Complaint,
   Sutton's improper entries falsely increased MSC's earnings by
   artificially deflating its liabilities.

   The Complaint alleges that Sutton violated Section 10(b) of the
   Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5
   promulgated thereunder. The Complaint also alleges that Sutton
   violated Section 13(b)(5) of the Exchange Act and Rule 13b2-1
   promulgated thereunder by circumventing MSC's system of internal
   accounting controls and falsifying MSC's books, records and accounts.

   In a related matter, the Commission, by consent, entered an Order