Plaintiff, for its class action complaint (the "Complaint"), alleges upon information and belief (said information and belief being based, in part, upon the investigation conducted by and through its undersigned attorneys), including examination o f public filings and articles in the public media, except as to those paragraphs relating to the plaintiff, his purchases of Sears, Roebuck & Co. ("Sears" or the "Company") common stock, and his suitability to serve as a class representative, which is all eged upon personal knowledge, the following:

1. This Court has Jurisdiction over the subject matter of this action pursuant to Section 27 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 USC § 78aa

2. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. § § 78j(b) and 78t(a); and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission (the "SEC"), 17 C.F.R. § 240. 1Ob-5.

3. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28 U.S.C. § 1391(b) because many of the alleged acts, transactions and conduct constituting violations of law, including the issuance and dissemination to the inv esting public of materially false and misleading information, occurred, at least in part, in this District and because defendant Sears has its corporate headquarters in this District.

4. In connection with the acts alleged in this Complaint, defendants, directly and indirectly, used the means and instrumentalities of Interstate commerce, including the mails, telephone communications and the facilities of the national securitie s exchanges.

5. This action is brought as a class action on behalf of all persons or entities who purchased the common stock of Sears during the Class Period, defined below, to recover damages caused to plaintiff and the Class, defined below, by defendants' v iolations of the federal securities laws.

6. During the Class Period, defendants engaged in a course of conduct that was designed to, and which did, inflate reported earnings by improperly pressuring bankrupt customers to continue paying their credit card bills even though these customer s had filed for bankruptcy court protection from creditors, and illegally hiding debt affirmation agreements from the bankruptcy court. This conduct had the effect of artificially inflating the market price of Sears' common stock during the Class Period, causing plaintiff and members of the Classes purchase Sears' common stock at inflated prices. In furtherance of this plan and course of conduct, defendants took the actions as set forth herein.

7. During the Class, Period, plaintiff and each member of the Class purchased shares of Sears common stock in the open market without knowledge of the misconduct of defendants alleged in this Complaint and suffered damages as a result. Plaintiff and each member of the Class directly or indirectly relied upon the individual defendants' and Sears' public reports, press releases, and other public statements, as more fully described below, and/or upon the integrity of the market for Sears' common st ock.

8. Plaintiff, a trust formed and existing under the laws of New York purchased 100 shares of Sears common stock during the Class Period.

9. Defendant Sears is a corporation organized and existing under and by virtue of the laws of New York. Its principal offices and corporate headquarters are located at 333 Beverly Road, Hoffman Estates, Illinois 60179.

10. Defendant Edward A. Brennan ("Brennan") was Chairman of the Board of Directors ("Chairman") and Chief Executive Officer ("CEO") of Sears from the beginning of the Class period, April 10, 1994, to August 9, 1995 when he retired.

11. Defendant Arthur C. Martinez, ("Martinez") was Chairman of Sears Merchandise Group ("SMG") a division of Sears from the beginning of the Class Period to August 1995 when he became Chairman and CEO of Sears, succeeding Brennan.

12. Defendant James M. Denny ("Denny")was Vice-Chairman of the Board of Directors("Vice-Chairman") of Sears from 1992 to 1994 and Acting CFO from the beginning of the Class period, April 10, 1994 to August 9, 1995 when he was replaced by Alan J. Lacy.

13. James A. Blanda ("Blanda") was Vice President and Controller of Sears during the Class Period.

14. Defendant Steven D. Goldstein ("Goldstein") was President of Sears Credit from 1996 to the present.

15. Defendant Alan J. Lacy ("Lacy"), was Executive Vice President and CFO of Sears from August 1995 to the present.

16. The above defendants, (the "Individual Defendants"). by reason of their direct and substantial management positions and responsibilities during the time relevant to this Complaint, were "controlling persons" of Sears within the meaning of Sec tion 20 of the Exchange Act, and had the power and influence to control Sears and exercised such control to cause the Company to engage in the violations and improper practices complained of herein. As CEO and Chairmen of Sears, Brennan and Martinez pers onally reviewed and authorized Sears' press releases and public statements, personally made statements to the press regarding Sears and signed Sears' SEC Forms 10-K and Annual Reports. Denny and Lacy, as CFO, were signatories of SEC Forms 1O-Q and 8-K wh ich announced financial results and were responsible for, and failed to assure, the veracity of Sears' financial statements. Shute and Levin, as General Counsel, were in a position to authorize Sears' policy of not filing debt reaffirmations with the ban kruptcy court as required by law. Goldstein, as President of Sears Credit, was in a position to, and did authorize Sears' policy of obtaining debt reaffirmations from bankrupt Sears credit customers. and, without ascertaining that such debt reaffirmatio ns had been properly filed with the court. improperly reported receivables collected pursuant to such debt reaffirmations as additions to revenues.

17. The Individual Defendants, because of their position as Chairman and or CEO of Sears or SMG, CFO of Sears, or president of Sears Credit had access to adverse non-public information about the business and future prospects of Sears and acted to conceal and misrepresent such material information in violation of their duties and responsibilities under the federal securities laws.

18. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of a class (the "Class") consisting of all persons and entities who purchased Sears common stock between April 16, 1994, and April 16, 1997, inclusive (the "Class Period") and were damaged thereby. Excluded from the Class are the Individual Defendants, members of their immediate families, any entity in which the individual Defendants have a controlling interest, and the legal representatives, heirs, successors, predecessors in interest, affiliates or assigns of the Individual Defendants.

19. The Class is so numerous that joinder of all Class members is impracticable. As of April 4, 1997, there were more 390 million shares of Sears common stock outstanding held by 243,986 shareholders of record throughout the United States and th e world.

20. Plaintiffs claims are typical of the claims of the members of the Class since all members of the Class purchased shares of Sears common stock during the Class Period and sustained damages arising out of defendants' wrongful conduct in violati on of federal securities laws as alleged herein.

21. Plaintiff will fairly and adequately protect the interests of the members of the Class. Plaintiff has retained counsel competent and experienced in class action and securities litigation and plaintiff has no interests antagonistic to or in c onflict with the other members of the Class.

22. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Joinder of all Class members is impracticable. The likelihood of individual Class members prosecuting separate claims is remo te. Since the damages suffered by individual Class members may be small relative to the expense and burden of individual litigation, it is impracticable for Class members individually to seek redress for the wrongs done to them. It is desirable for all concerned to concentrate this litigation in this particular forum. No unusual difficulties are likely to be encountered in the management of this class action.

23. There are questions of law and fact common to the members of the Class which predominate over any questions affecting any individual members. These common questions of law and fact include, among others:

(a) whether all defendants violated Section 10(b) of the Exchange Act and SEC Rule 1Ob-5;

(b) whether the individual Defendants violated Section 2O(a) of the Exchange Act;

(c) whether the Individual Defendants participated in the common course of conduct complained of herein;

(d) whether documents, releases, reports and statements disseminated to the investing public and stockholders of Sears during the Class Period omitted to state or misrepresented material facts about Sears earnings, and the material negative imp act on those earnings of Sears' improper pressure on its bankrupt customers, after they filed for bankruptcy, to continue paying their credit cards, and Sears' illegal hiding of debt affirmation agreements from the bankruptcy Court;

(e) whether the Individual Defendants acted with knowledge or with reckless disregard for the truth in omitting to state and/or misrepresenting material facts about Sears' earnings and the material negative impact of Sears' improper pressure on bankrupt customers to continue paving their credit card bills even after they filed for personal bankruptcy, and Sears' illegal concealment of debt reaffirmation agreements from the bankruptcy Court;

(f) whether, during the Class Period, the market price of Sears's common stock was artificially inflated due to the non-disclosures and/or material misrepresentations complained of herein; and

(g) whether the members of the Class have sustained damages and, if so, the proper measure thereof.

24. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that:

(a) the Individual Defendants made public misrepresentations during the Class Period as alleged in this Complaint;

(b) the misrepresentations were material;

(c) shares of Sears common stock were traded on a developed national stock exchange, namely the New York Stock Exchange which is an efficient market within the meaning of that term in the context used in this Complaint; and

(d) plaintiff and the other members of the Class purchased their Sears shares between the time defendants made the misrepresentations and the time the truth was at least partially revealed, without knowledge of the falsity of the misrepresentatio ns.

25. Based upon the above, plaintiff is entitled to a presumption of reliance upon the integrity of the market for the purposes of class certification. Similarly, plaintiff is also entitled to a presumption of reliance with respect to the omissio ns alleged in this Complaint.

26. The Exchange Act's safe harbor provision for forward-looking statements under certain circumstances does not apply to any of the statements alleged to be false and misleading in this Complaint. The statements complained of herein were not fo rward-looking as defined by the Exchange Act. To the extent that any of the statements alleged herein are deemed forward-looking, all of those statements are material and none of those statements were accompanied by meaningful cautionary statements speci fically identifying factors that could cause actual results to differ materially from those in the putative forward-looking statements. Alternatively, to the extent that the statutory safe harbor does apply to any statements pleaded herein, the Defendant s are liable for those false statements because, at the time each of those statements was made, they knew that the statement was false and the corporate defendant, Sears, is liable because the statements were authorized and/or approved by executive office rs and at least one director of Sears who knew that those statements were false when made.

27. On April 10, 1997, Sears filed an SEC Form 8-K to which it attached a press release dated April 10, 1997 In the 8-K Sears declared:

On April 10, 1997, the registrant issued the press release attached hereto as Exhibit 99. The press release relates to a voluntary restitution plan Sears filed with the U.S. Bankruptcy Court for the District of Massachusetts on April 9, 1997. Sears estimates that during this period it received notice of $2.4 billion of debt owed to it which was the subject of Chapter 7 bankruptcy filings, of which Sears reaffirmed approximately $412 million. Sears does not yet know what portion of the $412 million in reaffirmed debts were not filed with the court, but is working expeditiously to resolve this matter. While the cost of the plan has not yet been determined, it will be charged to operations as soon as the amount is quantified. (Emphasis added)

28. The press release itself said:

Sears, Roebuck and Co. yesterday filed a motion in U.S. Bankruptcy Court for the District of Massachusetts indicating that the company would voluntarily repay Chapter 7 bankruptcy debtors nationwide whose debt reaffirmations were not filed as required by the U.S. Bankruptcy Code.

Under the reaffirmation provisions of the U.S. Bankruptcy Code, a debtor seeking Chapter 7 protection may agree to repay his or her debts to creditors. This reaffirmation must be filed with the court to be valid.

Sears said it exercised flawed legal judgment in the execution and handling of certain debt reaffirmations. Immediately upon learning of this problem, the company's senior management last week directed that all reaffirmations must be filed in a timely fashion. Yesterday, the company initiated the voluntary restitution plan described in its motion to the Bankruptcy Court in Massachusetts. The company also discussed its plan with the offices of the Massachusetts Attorney General and the U.S. Bankruptcy Trustee for Region One, which includes Massachusetts. Under the plan, the company will return amounts collected through reaffirmation agreements that were not filed, including principal and finance charges, with interest.

To implement the plan, Sears has initiated a process to identify any debtors whose reaffirmation agreements were not filed properly during the period 1992 to date. Until repayments can be made, the company, as soon as possible, will cease sending billing statements and assessing interest charges to former debtors who signed reaffirmation agreements that were not filed.

While the company is in the early stages of assessing the cost of its plan, Sears expects it may have a material effect on 1997 annual earnings.

The company yesterday received documents relating to a class action suit filed in the Bankruptcy Court of Massachusetts that pertain to the same issues.

Sears has retained the services of Professor Lawrence P. King, the Charles Seligson Professor of Law at New York University School of Law, to perform a review of Sears procedures with regard to reaffirmation agreements. The company advised the court that it is committed to following Professor King's recommendations to assure future compliance with requirements of the bankruptcy code.

(Emphasis added)

29. In other words, Sears pressured its customers who had filed personal bankruptcy into agreeing to continue to pay Sears money, even though bankruptcy proceedings had commenced, and even though bankruptcy law requires that any such "debt reaffirma tions" be reported to the bankruptcy court.

30. In a hearing before the bankruptcy court in Massachusetts on April 4, 1997, Chief Judge Carol J. Kenner said of Sears:

This is one of the most egregious cases I've seen in almost eleven years on the bench ... if not the most egregious ... abuse..... It's been... I think one of the most professionally frustrating instances of stonewalling I have seen in a long time, maybe ever. What Sears has done is they're kicking the little guy when he's down - 2,734 times. They've taken advantage of people, and frankly, I think their actions have been predatory.

31. Moreover, it was reported in The Wall Street Journal of April 11, 1997 that a trustee in many of the personal bankruptcy cases said that Sears "uses repossession of goods purchased with their [customers] credit cards as leverage' in getting customers to sign reaffirmation agreements."

32. Bankruptcy courts often disallow such reaffirmation agreements in the belief that consumers cannot afford them, and a federal bankruptcy commission has urged Congress to preclude the agreements.

33. By not informing the bankruptcy court, Sears was collecting debt which may have been eliminated by the bankruptcy court.

34. By not disclosing the reaffirmation agreements, Sears was able to hold down its credit-card charge-offs which, nonetheless, have been rising. Since Sears' credit business accounts for about half of Sears' net income, it was imperative for Se ars to limit its credit card losses.

35. The Sears credit card is crucial to Sears' business. In its 1996 annual Report, Sears said that more than 60% of all merchandise sold in Sears full-line stores was purchased on Sears card in 1996. For big-ticket items such as washers, dryer s, ranges and refrigerators, and hard-line items such as tools, paint, tires and batteries, the market share is even higher.

36. In the press release, Sears admitted that it had "exercised flawed legal judgment in the execution and handling of certain debt reaffirmations."

37. Sears also said that "While the company is in the early stages of assessing the cost of its plan, Sears expects it may have a material effect on 1997 annual earnings."

38. As a result of this announcement, the price of Sears stock fell 7.6% in one day, from $50 to $47 a share.

Background

39. Sears originated from an enterprise established in 1886. It was incorporated under the laws of New York in 1906. Its principal executive offices are located at 3333 Beverly Road, Hoffman Estates, Illinois. Sears and its consolidated subsid iaries is a multi-line retailer which provides a wide array of merchandise and services through two segments-Domestic Operations and International Operations. The Company is among the largest retailers in the world on the basis of sales of merchandise an d services.

40. Sears generated revenues of $29.6 billion $31.2 billion and $33.8 billion, in 1994, 1995 and 1996, respectively, that is, the Class Period, with earnings of $857 million, $ 1 billion and $1.3 billion in 1994, 1995 and 1996 respectively. Duri ng that same period, Sears Credit generated approximately half of all earnings for Sears Merchandise Group.

41. The Domestic Operations segment includes the Company's Retail Stores (comprised of Full-line, Home and Auto Stores), Sears Credit, the division of Sears responsible for its credit card business, Home Services and Direct Response Marketing in the United States and Puerto Rico. Sears Credit is responsible for all aspects of the Sears card, the largest proprietary credit card in the United States

42. The Company's domestic credit operations provide credit for customers to purchase goods and services from the Retail Stores, Home Services and Direct Response Marketing. As of December 1996, Credit had approximately 27.4 million active custo mer credit accounts (accounts with balances as of the beginning or end of December 1996). These accounts had an average balance of $971. Sears card, the traditional charge card, accounted for approximately 90% of total receivables. There were approxima tely 40 million Sears card customers with accounts that were active during any month in 1996.

43. Until recent years, Sears only accepted its own Credit Card Today, Sears stores accept major third party credit and debit cards such as VISA, MasterCard, American Express and Discover Card. Sears card as a percent of total sales in the Full- line and HomeLife Stores was approximately 60.2%, 59.7% and 58.3% for fiscal years 1996, 1995 and 1994, respectively. Since August 1, 1993, when Sears began to accept VISA, MasterCard and .American Express cards at all Sears stores, the Company has focus ed intensely on marketing and other initiatives that are designed to maintain and increase the penetration of Credit products in all sales and service channels, as well as to increase the revenues of the Retail Stores. Home Services and Direct Response M arketing.

44. In its report on SEC Form 8-K of April 10, 1997, Sears disclosed that it was reviewing the filing of debt reaffirmations as far back as 1992. At this time, there is no evidence that Sears' improper policy of failing to file debt reaffirmatio ns in bankruptcy court may not have been in place at an earlier date.

45. The failure to file debt reaffirmations with the bankruptcy court meant that Sears had illegally captured funds to which it was not entitled. The exact magnitude of that illegal capture is not yet known. Sears admitted publicly that the re stitution of those funds to Sears customers would have a "material effect" on 1997 annual earnings," in a company which reached $1 billion in earnings in 1995. Moreover, since Credit earnings have accounted for approximately half of the earnings of Sears Merchandise Group, the amount is clearly substantial. Sears further admitted that the amount of such reaffirmations could reach in excess of $400 million not including interest, penalties or Fines.

Defendants' Misstatements During The Class Period

46. From 1992 to April 10, 1997, both before and during the Class Period, Sears routinely reported earnings which had been inflated by credit revenues improperly obtained pursuant to debt affirmations which had not been reported to bankruptcy cou rt in violation of bankruptcy law.

47. In its Annual Report for 1992, Sears reported a net loss of $3.932 billion, or $10.72 per share, on revenues of $52.3 billion. which included Sears' interest in The Allstate Corporation and The Homart Development Co., Sears insurance and rea l estate subsidiaries, respectively, until 1995. While Sears reported a major net loss over all, it reported net income of $408 million, on revenues of $2.8 billion, for its Credit division.

48. In its SEC Form 10-K for 1992, filed on March 30, 1993, prior to the Class Period, Sears reported that there was $20.3 billion of retail customer receivables before sales of account balances and that approximately 8.1% of total credit balance s are liquidated each month.

49. In its Annual Report for 1993, filed with its SEC Form 1O-K on march 29, 1994, Sears reported net income of $7516 million, on revenues of $29.6 billion for the Sears Merchandise Group. Sears also reported credit earnings of $440 million on c redit revenues of $3.3 billion.

50. In the same document, Sears said that "[a]s of December 31, 1993, Credit had approximately 26 million active customer credit accounts. These accounts had an average balance of $795, for a total of $20.4 billion of retail customer receivables before sales of account balances." Sears said that "[b]ased on current experience, approximately 7.9% of the amount of total credit balances is liquidated each month."

51. In its SEC Form 1O-K for 1994, at the beginning of the Class period, filed on March 24, 1995, Sears reported net income of $890 million for the Merchandise Group on revenues of $33 billion. Sears also reported that its domestic credit activi ties had an average balance of $842, for a total of $21.3 billion of retail customer receivables before sales of account balances.

52. In its 1995 Annual Report, Sears reported net income of $1.03 billion, or $4.50 per share, on revenue of $34.9 billion, including credit revenues of $3.9 billion on credit receivables, of $23.8 billion. Credit revenues were reported up 7.3% from 1994 "reflecting higher gross receivable balances driven by strong merchandise sales and a reduction in the minimum required monthly payment rate." Sears reported that credit receivables were up 11.4% from 1994.

53. The year 1995 was hailed as a "milestone" for Sears which reached $1 billion in earnings for the first time.

54. The year 1995 was also the second full year during which Sears accepted third-party credit cards - including Visa, MasterCard, American Express and the Discovery Card. Inevitably, the use of such cards threatened the monopoly of the Sears card, and Sears was well aware of the problem. In its 1995 SEC Form 10-K, Sears stated that "[a]lthough customers' use of third party credit cards replaces to some extent their use of Sears credit plans, It is expected that the long-term effect on credit oper ations will be offset by the effects of new initiatives to increase Sears card market penetration in all sales and service channels without lowering credit standards.

55. In its Annual Report for 1996, Sears reported earnings of $1.27 billion, an increase of 24% over 1995, on revenues of $38.24 billion, an increase of 9.3%. Chairman Martinez also announced Sears "First ever back-to-back billion-dollar sales we eks during the holiday shopping season." Sears also reported Credit revenue of $4.4 billion, an increase of 16% over 1995, double the increase of 1995 over 1994. The 1996 Annual Report also included the following data relating to Sears Credit:

                            1996          1995          1994

Gross Credit Card           26.71         23.7          21.3
Receivables

Receivable Balances          6.3           4.5           3.9
Sold at Year End

Owned Credit Card           20.4          19.2          17.4
Receivables at Year
End

Average Account             971           912           842
Balance (dollars)
________________________

¹ In billions of dollars.

56. Because the size of the illegal collections pursuant to debt reaffirmations is "material," by Sears' own admission, and because the practice began at least as long ago as 1992. Sears financial reports from at least 1992 to the present are misleading since they include material amounts of illegal revenue from bankrupt credit customers. Similarly misleading are public statements by Sears which announced Sears' earnings and failed to disclose that material amounts of income from debt reaffirmations were being collected from Sears credit card customers outside of the procedures required by the Bankruptcy Code and were subject to being reversed if the practice was found to be improp er.

57. In its public statements, Sears trumpeted its earnings. For example, in a press release of January 23, 1997, which was included as an exhibit to Sears SEC Form 8-K of January 23, 1997, Sears reported that fourth-quarter 1996 income "surged" 24.6% to $567 million or $ 1.42 per common share. Chairman Martinez said that "[w]e ended the year with excellent fourth-quarter results, which are even more impressive given the strength of last years fourth quarter." He added that "December sales were s trong across the board, and included our first ever back-to-back billion dollar sales weeks." The press release also reported that "Sears 1996 net income rose 24.0 percent to a record of $ l.27 billion, or $3.12 per common share."

58. In commenting on Sears' credit card business, which produced half of Sears 1996 earnings, the press release declared that "credit performance [was] strong despite increased charge-offs." Credit revenues increased 172 percent in the fourth qu arter of 1996 " due to higher receivable balances driven by strong merchandise sales and the impact of uniform pricing." The net interest margins for the fourth quarter increased by $160 million as a result of the increase in credit revenues and reduced funding rates.

59. At the same time, the press release reported that Sears provision for uncollectible accounts increased $133 million to $328 million in the fourth quarter largely due to a 56.9 percent increase in account charge-offs. Sears attributed this incr ease to "continuing growth in the credit receivable portfolio as well as the industry-wide increase in personal bankruptcies and delinquencies." Moreover, in a quoted remark which takes on added meaning since the April 10, 1997 revelations, Chairman Mart inez added that Sears "has a number of initiatives already in place to improve collection efforts. . . ."

60. Commenting on the second quarter 1996, Chairman Martinez said that "[o]ur credit business experienced strong growth during the quarter and continued to perform well.... While we experienced increased write-offs reflecting the higher levels of personal bankruptcies, they were more than offset by improved net interest margin."

61. The statements above were false and misleading when made since a "material" portion of Sears earnings came from funds illegally collected from Sears bankrupt credit customers who were pressured into paying Sears by the threat of repossession of their purchases. Sears knew that, eventually, these illegal receipts would have to be returned with interest, and that their statements of earnings were, therefore, fraudulent.

62. The statements above were also fraudulent since Sears failed to disclose its policy of bankrupt credit card customers to sign debt reaffirmations and not file such debt reaffirmations with the bankruptcy court as required by law.

Sears Knew That It Was Making Fraudulent Public Statement.

63. As a sophisticated multi-billion dollar corporation, Sears was aware, or was reckless in not being aware, that the bankruptcy laws required the filing of debt reaffirmations. Sears voluntary offer of restitution of hundreds of millions of dollars demonstrates that had it conducted the most cursory of investigations, it would have concluded that the practices were illegal and that, therefore, its statements about its financial condition were misleading because they were based on improper collection of revenue.

The Truth Is Revealed To The Public

64. On April 10, 1997, Sears issued a press release and, simultaneously, filed an SEC Form 8-K with the press release attached as an exhibit, in which it announced that a) it had illegally failed to file debt reaffirmations with the bankruptcy co urts which were handling the personal bankruptcy cases of Sears credit card customers; b) it was going to return the money which it had improperly received to those bankrupt credit card customers, c) Sears had "exercised flawed legal judgment in the execu tion and handling of certain debt reaffirmations"; and d) the cost of the restitution program would have a "material [negative] effect on 1997 earnings." As a result of that announcement, the price of Sears stock dropped 7.6% from 50 7/8 to 47.

65. Plaintiff did not, and could not have known, that Sears' public statements about its earnings during the Class period were misleading until Sears' public announcement on April 10, 1997.

COUNT I

VIOLATION OF SECTION 10(b) OF THE EXCHANGE
ACT AND RULE lOb-5 AGAINST ALL DEFENDANT

65. Plaintiff incorporates by reference all of the allegations of all prior paragraphs, as though fully set forth herein.

66. This claim is asserted by plaintiff and the Class against all defendants and is based upon Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule lOb-5 promulgated thereunder.

67. During the Class Period, these defendants, individually and in concert, directly and indirectly, engaged and participated in a continuous course of conduct to conceal adverse material information regarding Sears as specified herein. Defendan ts recklessly employed devices, schemes, and artifices to defraud and recklessly engaged in acts, practices, and a course of conduct as herein alleged in an effort to maintain artificially high market prices for the common stock of defendant Sears. This included the formulation, making of and/or participating in the making of untrue statements of material facts and the omission to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

68. Defendants' acts and practices operated as a fraud and deceit upon plaintiff and other members of the Class by creating expectations of optimism for the ongoing financial performance of the Company which were unrealistically favorable in ligh t of their knowledge or reckless disregard of the truth concerning Sears and Sears' improper pressure on bankrupt customers to continue paying their credit card bills and the illegal concealing of debt reaffirmation agreements from the bankruptcy court, i n connection with the purchase of Sears publicly traded securities by plaintiff and the other members of the Class.

69. The market price of Sears common stock was artificially inflated throughout the Class Period by defendants' omissions and misrepresentations.

70. The statements particularized above were false and misleading when made by the Individual Defendants, and/or in the name of Sears. By making these statements, the defendants recklessly created a false and misleading impression which artifici ally inflated the market price of Sears's common stock throughout the Class Period. Defendants disregarded the fact that Sears' Financial statements were false because they included revenues generated by Sears' pressure on its bankruptcy customers and its concealment of d ebt reaffirmation agreements. Defendants, who were under a duty to make truthful and complete disclosures, instead misrepresented or concealed material facts throughout the Class Period.

71. During the Class Period, Sears made the statements identified above which were materially false and misleading in violation of Section 10(b) of the Exchange Act and Rule 1Ob-5 thereunder. These statements were materially false and misleading and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

72. With reckless disregard for the true prospects of Sears, the Individual Defendants caused Sears to make the statements containing misstatements and omissions of material fact as alleged herein.

73. In direct or indirect reliance on the aforesaid false and misleading statements, plaintiff and the other members of the Class purchased Sears common stock during the Class Period at artificially inflated prices and were damaged thereby.

74. Relying upon the integrity of the marketplace and the market price of Sears common stock, plaintiff and the other members of the Class purchased Sears common stock at artificially inflated prices and were damaged thereby. Defendants' conduct as alleged has damaged plaintiff and the other members of the Class in an amount which cannot presently be ascertained.

75. Had plaintiff and the other members of the Class known of the materially adverse information which was not disclosed by defendants they would not have purchased Sears common stock at all, or not at the artificially, inflated prices they did, and would not have sustained damages.

COUNT II

VIOLATION OF SECTION 20 OF THE EXCHANGE
ACT AGAINST THE INDIVIDUAL DEFENDANTS

76. Plaintiff incorporates by reference all of the allegations of all prior paragraphs as though fully set forth herein.

77. This Count is asserted against the Individual Defendants and is based on Section 20(a) of the Exchange Act. The Individual Defendants acted as controlling persons of Sears within the meaning of Section 20 of the Exchange Act. By reason of t heir positions as Chairman, CEO, Vice President and/or Controller of Sears or SMG, CFO or President of Sears Credit, the Individual Defendants had the Power and authority to cause or to prevent the wrongful conduct complained of herein.

78. The Individual Defendants reviewed the press releases issued and the public documents filed by Sears, supervised the compilation of information contained in those documents, supplied information to Sears' public relations personnel who issued Sears press releases, and ultimately, took the responsibility for the veracity of those documents by commenting on them.

79. By reason of such wrongful conduct, and their responsibility as the highest ranking executives of Sears, the Individual Defendants are liable to plaintiff and the Class pursuant to Section 20 of the Exchange Act. As a direct and proximate re sult of defendants' wrongful conduct, plaintiff and the other members of the Class suffered damages in connection with their purchases of Sears common stock during the Class Period.

PREYER FOR RELIEF

WHEREFORE, plaintiff prays for Judgment as follows

A. An order certifying the Class as set forth herein and designating plaintiff as the representatives thereof;

B. A judgment declaring the conduct of the defendants to be in violation of law as set forth herein;

C. A Judgment awarding plaintiff and the other members of the Class compensation for the damages which they have sustained as a result of the defendants' unlawful conduct stated above;

D. A judgment awarding plaintiffs reasonable attorneys' fees, experts' fees, interest and cost of suit; and

E. Granting such other and further relief as this Court may deem just.

PLAINTIFF DEMANDS A JURY TRIAL

Dated: April 16, 1997

MUCH SHELIST FREED DENENBERG
AMENT BELL & RUBENSTEIN, P.C.

By_________________________ Michael J. Freed,
Carol V. Gilden
200 N. LaSalle Street
Suite 2100
Chicago, Illinois 60601
(312) 346-3100

-and-
WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
Fred T. Isquith (FI-6782)
Robert Abrams (RA-7559)
270 Madison Avenue
New York, New York 10016
(212) 545-4600

BERMAN DEVALERIO & PEASE
Glen DeValerio
One Liberty Square
Boston, Massachusetts 02109
(617) 542-8300

Attornevs for Plaintiff

CERTIFICATION OF NAMED PLAINTIFF

PURSUANT TO FEDERAL SECURITIES LAWS

Duane Arnold as Trusted for the Ursula Desimone Trust declares, as to the claims asserted under the federal securities laws, that: )

1. He has reviewed the complaint and authorized its filing.

2. The Trust did not purchase the security that is the subject of this action at the direction of plaintiff's counsel or in order to participate in this private action.

3. He is willing to serve as a representative party on behalf of the Class, including providing testimony at deposition and trial, if necessary.

4. During the class review the Trust purchased 100 shares or Sears stock.

5. The Trust has not sought to serve as a representative party for a class during the three years prior to the date of this Certificate under the Federal Securities Laws.

6. The Trust will not accept any payment for serving as a representative party on behalf of the class beyond the Trust's pro rata share or any recovery, except such reasonable costs and expenses (including lost wages) directly relating to the representation of the class as ordered or approved by the courts.

I declare under penalty or perjury that the foregoing is true and correct. Executed this 16 on day of April 1997, at

__________________ /s/

__________________

Duane Arnold

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