Edgar Filing: VECTOR GROUP LTD

As filed with the Securities and Exchange Commission on February 5, 2002

Registration No. 333-__________

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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VECTOR GROUP LTD.
(Exact Name of Registrant as Specified in its Charter)

Delaware 65-0949535
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

100 S.E. Second Street
Miami, Florida 33131
(305) 579-8000

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

Richard J. Lampen
Executive Vice President
Vector Group Ltd.
100 S.E. Second Street
Miami, Florida 33131
(305) 579-8000

(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Approximate date of commencement of proposed sale to the public: From time to
time following the effective date of the Registration Statement.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ X ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [ ]

If this form is post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

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CALCULATION OF REGISTRATION FEE

Proposed Maximum Proposed Maximum
Title of Shares to Be Amount to Be Offering Price per Aggregate Offering Amount of
Registered Registered Unit Price Registration Fee
--------------------- ------------ ------------------ ------------------ ----------------

Common Stock, 170,000 $27.23 (1) $4,629,100 $426
$.10 par value

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(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) based on average high and low prices for
Vector's common stock on the New York Stock Exchange consolidated
reporting system on February 4, 2002.

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall hereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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[The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.]

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PROSPECTUS SUBJECT TO COMPLETION
DATED February 5, 2002

170,000 SHARES

VECTOR GROUP LTD.

COMMON STOCK

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These shares may be sold by the selling stockholder
listed on page 11. We will not receive any proceeds from the
sale of these shares.

Our common stock is listed on The New York Stock
Exchange under the symbol "VGR". The last reported sale price
of the common stock on The New York Stock Exchange on
February ___, 2002 was $_________.

The common stock may be sold in transactions on The New
York Stock Exchange at market prices then prevailing, in negotiated
transactions or otherwise. See "Plan of Distribution."

THIS OFFERING INVOLVES MATERIAL RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED THE SECURITIES TO BE ISSUED UNDER THIS PROSPECTUS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

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February ___, 2002

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the Website maintained by the SEC at www.sec.gov. We have filed
a registration statement to register with the SEC our common stock listed in
this prospectus. This prospectus is part of that registration statement. As
allowed by SEC rules, this prospectus does not contain all of the information
you can find in the registration statement or the exhibits to the registration
statement.

Some of the important business and financial information that you may
want to consider is not included in this prospectus, but rather is "incorporated
by reference" to other documents that we have filed with the SEC. The
information that is incorporated by reference consists of:

o Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000, filed with the SEC on April 2, 2001;

o Our Quarterly Reports on Form 10-Q for the quarter ended March 31,
2001, filed with the SEC on May 14, 2001, for the quarter ended June
30, 2001, filed with the SEC on August 14, 2001, and for the quarter
ended September 30, 2001, filed with the SEC on November 14, 2001;

o Our Current Reports on Form 8-K, filed with the SEC on May 17, 2001,
June 29, 2001, July 2, 2001, July 16, 2001, July 25, 2001, August
22, 2001, November 15, 2001 and January 4, 2002;

o The description of our common stock contained in our Current Report
on Form 8-K, filed with the SEC on April 3, 2000; and

o All documents filed by us under the Securities Exchange Act of 1934
after the date of this prospectus and before the termination of this
offering.

If there is any contrary information in a previously filed document
that is incorporated by reference, then you should rely on the information in
this prospectus.

You can obtain any of the documents incorporated by reference through
us or the SEC. Documents incorporated by reference are available from us without
charge. You may obtain documents incorporated by reference in this prospectus by
requesting them in writing to the following address or by telephone:

Vector Group Ltd.
Attention: Investor Relations
100 S.E. Second Street, 32nd Floor
Miami, Florida 33131
(305) 579-8000

PROSPECTUS SUMMARY

BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL INFORMATION WHICH MAY
BE IMPORTANT TO YOU. YOU SHOULD READ THIS ENTIRE PROSPECTUS, INCLUDING THE
INFORMATION INCORPORATED BY REFERENCE, BEFORE YOU DECIDE WHETHER TO INVEST IN
OUR COMMON STOCK. YOU SHOULD PAY SPECIAL ATTENTION TO THE RISKS OF INVESTING IN
OUR COMMON STOCK AS DISCUSSED UNDER "RISK FACTORS."

THE COMPANY

We are a holding company for a number of businesses. We hold these
businesses through our wholly-owned subsidiary VGR Holding Inc. We are engaged
principally in:

o the manufacture and sale of cigarettes in the United States through
our subsidiary Liggett Group Inc., and

o the development and marketing of new, reduced carcinogen and
nicotine-free cigarette products through our subsidiary Vector
Tobacco Inc.

Our majority-owned subsidiary, New Valley Corporation, completed in
December 2001 the distribution to its stockholders of its shares in Ladenburg
Thalmann Financial Services Inc., its former majority-owned subsidiary engaged
in the investment banking and brokerage business. The Ladenburg shares received
by us were, in turn, distributed to our stockholders. New Valley is currently
engaged in the real estate business and is seeking to acquire additional
operating companies.

We are controlled by Bennett S. LeBow, our Chairman and the Chairman of
VGR Holding and New Valley, who beneficially owns approximately 35.3% of our
common stock.

The mailing address of our principal executive offices is 100 S.E.
Second Street, Miami, Florida 33131. Our telephone number at that address is
(305) 579-8000.

THE OFFERING

Securities offered by the
selling stockholder.................. 170,000 shares of common stock

Common Stock outstanding............. 33,248,260 shares of common stock

NYSE symbol.......................... Common Stock: VGR

USE OF PROCEEDS

The net proceeds from the sale of the shares will be received by the
selling stockholder. None of the proceeds from any sales by the selling
stockholder will be received by us.

RISK FACTORS

BEFORE YOU INVEST IN OUR SECURITIES, YOU SHOULD BE AWARE THAT WE ARE
SUBJECT TO VARIOUS RISKS, INCLUDING THE ONES LISTED BELOW, THE OCCURRENCE OF ANY
OF WHICH COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS AS WELL
AS THE OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN EVALUATING AN INVESTMENT IN OUR COMMON STOCK.

WE AND OUR SUBSIDIARIES HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS

We and our subsidiaries have significant indebtedness and debt service
obligations. At September 30, 2001, we and our subsidiaries had total
outstanding indebtedness of $287.6 million. In addition, subject to the terms of
any future agreements, we and our subsidiaries will be able to incur additional
indebtedness in the future. There is a risk that we will not be able to generate
sufficient funds to repay our debt. If we cannot service our fixed charges, it
would significantly harm us and the value of our common stock.

WE ARE A HOLDING COMPANY AND DEPEND ON CASH PAYMENTS FROM SUBSIDIARIES WHICH ARE
SUBJECT TO CONTRACTUAL AND OTHER RESTRICTIONS

We are a holding company and have no operations of our own. We hold our
interests in our various businesses through our wholly-owned subsidiary, VGR
Holding. In addition to our own cash resources, our ability to pay interest on
our convertible notes and to pay dividends on our common stock depends on the
ability of VGR Holding to make cash available to us. The purchase agreement for
the VGR Holding 10% senior secured notes due 2006 contains covenants which limit
the ability of VGR Holding to make distributions to us to 50% of VGR Holding's
net income, unless VGR Holding holds cash of $50 million after giving effect to
the payment of the distribution. VGR Holding's ability to pay dividends to us
depends primarily on the ability of Liggett, our wholly owned subsidiary, and
New Valley, in which we indirectly hold an approximately 56% interest, to
generate cash and make it available to VGR Holding. Liggett's revolving credit
agreement prohibits Liggett from paying cash dividends to VGR Holding unless
Liggett's borrowing availability exceeds $5 million for the thirty days prior to
payment of the dividend, and immediately after giving effect to the dividend,
and it is in compliance with the covenants in the credit facility, including an
adjusted net worth and working capital requirement.

As the controlling New Valley stockholder, we must deal fairly with New
Valley, which may limit its ability to enter into transactions with New Valley
that result in the receipt of cash from New Valley and to influence New Valley's
dividend policy. In addition, since we indirectly own only approximately 56% of
the common shares of New Valley, a significant portion of any cash and other
assets distributed by New Valley will be received by persons other than us and
our subsidiaries.

Our receipt of cash payments, as dividends or otherwise, from our
subsidiaries is an important source of our liquidity and capital resources. If
we do not have sufficient cash resources of our own and do not receive payments
from our subsidiaries in an amount sufficient to repay our debts, we must obtain
additional funds from other sources. There is a risk that we will not be able to
obtain additional funds at all or on terms acceptable to us. Our inability to
service these obligations would significantly harm us and the value of our
common stock.

LIGGETT FACES INTENSE COMPETITION IN THE DOMESTIC TOBACCO INDUSTRY

Liggett is considerably smaller and has fewer resources than all its
major competitors and as a result has a more limited ability to respond to
market developments. Published industry sources indicate that the three largest
manufacturers control approximately 85% of the United States cigarette market.
Philip Morris Companies Inc. is the largest and most profitable manufacturer in
the market, and its profits are derived principally from its sale of premium
cigarettes. Based on published industry sources, Liggett's management believes
that Philip Morris had approximately 61.9% of the premium segment and 51.1% of
the total domestic market during the first nine months of 2001. During the first
nine months of 2001, Liggett's share of the premium cigarette segment was 0.3%,
and its share of the total domestic cigarette market was 2.1%. Philip Morris and
RJR, the two largest cigarette manufacturers, have historically, because of
their dominant market share, been able to determine cigarette prices for the
various pricing tiers within the industry. The other cigarette manufacturers
historically have brought their prices into line with the levels established by
the two major manufacturers.

LIGGETT'S BUSINESS IS HIGHLY DEPENDENT ON THE DISCOUNT CIGARETTE SEGMENT

Liggett depends more on sales in the discount cigarette segment of the
market, relative to the full-price premium segment, than its major competitors.
Approximately 91.3% of Liggett's unit sales in the first nine months of 2001
were generated in the discount segment. The discount segment is highly
competitive with consumers having less brand loyalty and placing greater
emphasis on price. While the four major manufacturers all compete with Liggett
in the discount segment of the market, the strongest competition for market
share has recently come from a group of small manufacturers, most of which are
producing low quality, deep discount cigarettes. While Liggett's share of the
discount market increased from 3.9% in 1999 to 5.3% in 2000, published industry
sources indicate that these smaller manufacturers' total market share increased
from 8.8% to 13.8% due to their increased competitive discounting. Liggett's
share of the discount market for the first nine months of 2001 was 7.2%. If the
discount market pricing continues to be impacted by these smaller manufacturers,
margins in Liggett's largest market segment could be negatively affected, which
in turn could negatively affect the value of our common stock.

LIGGETT'S MARKET SHARE HAS DECLINED IN RECENT PERIODS

Liggett has suffered a substantial decline in unit sales and associated
market share in recent years, although Liggett's unit sales and market share
increased during 2000 and 2001. This earlier market share erosion resulted in
part from its highly leveraged capital structure that existed until December
1998 and Liggett's limited ability to match other competitors' wholesale and
retail trade programs, obtain retail shelf space for its products and advertise
its brands. The decline in recent years also resulted from adverse developments
in the tobacco industry, intense competition and changes in consumer
preferences. Based on published industry sources, Liggett's management believes
that Liggett's overall domestic market share during the first nine months of
2001 was 2.1%, compared with 1.5% for 2000 and 1.2% for 1999. Based on published
industry sources, Liggett's management believes that Liggett's share of the
premium segment during the first nine months of 2001 was 0.3% as compared to
0.2% in 2000 and 0.3% in 1999, and its share of the discount segment during the
first nine months of 2001 was 7.2%, up from 5.3% in 2000 and 3.9% for 1999. If
Liggett's market share declines, Liggett's sales volume, operating income and
cash flows could be negatively affected, which in turn could negatively affect
the value of our common stock.

THE DOMESTIC CIGARETTE INDUSTRY HAS EXPERIENCED DECLINING UNIT SALES IN RECENT
PERIODS

Industry-wide shipments of cigarettes in the United States have been
generally declining for a number of years, with published industry sources
estimating that domestic industry-wide shipments decreased by approximately 2.2%
during the first nine months of 2001. Published industry sources estimate that
domestic industry-wide shipments increased by 0.1% in 2000 compared to 1999 and
decreased by approximately 9% in 1999 compared to 1998. While Liggett's domestic
shipments increased 22.9% in 2000, Liggett's unit sales volume in 1999 decreased
more significantly (11.3%) than the overall domestic market. Liggett's
management believes that industry-wide shipments of cigarettes in the United
States will generally continue to decline as a result of numerous factors. These
factors include health considerations, diminishing social acceptance of smoking
and legislative limitations on smoking in public places, federal and state
excise tax increases and settlement-related expenses which have contributed to
large cigarette price increases. If this decline in industry shipments continues
and Liggett is unable to capture market share from its competitors, or if the
industry is unable to offset the decline in unit sales with price increases,
Liggett's sales volume, operating income and cash flows could be negatively
affected, which in turn could negatively affect the value of our common stock.

LITIGATION AND REGULATION WILL CONTINUE TO HARM THE TOBACCO INDUSTRY

The cigarette industry continues to be challenged on numerous fronts.
New cases continue to be commenced against Liggett and other cigarette
manufacturers. As of September 30, 2001, there were approximately 318 individual
suits, 38 purported class actions and 104 governmental and other third-party
payor health care reimbursement actions pending in the United States in which
Liggett was a named defendant. In addition to these cases, during 2000, an
action against cigarette manufacturers involving approximately 1,250 named
individual plaintiffs was consolidated before a single West Virginia state
court. Liggett is a defendant in most of the cases

pending in West Virginia. Approximately 38 other purported class action
complaints have been filed against the cigarette manufacturers for alleged
antitrust violations. As new cases are commenced, the costs associated with
defending these cases and the risks relating to the inherent unpredictability of
litigation continue to increase.

An unfavorable verdict was returned in the first phase of the ENGLE
smoking and health class action trial pending in Florida. In July 2000, the jury
awarded $790 million in punitive damages against Liggett, in the second phase of
the trial, and the court entered an order of final judgment. Liggett intends to
pursue all available post-trial and appellate remedies. If this verdict is not
eventually reversed on appeal, or substantially reduced by the court, it will
have a material adverse effect on us. Liggett has filed the $3.45 million bond
required under recent Florida legislation which limits the size of any bond
required, pending appeal, to stay execution of a punitive damages verdict. On
May 7, 2001, Liggett reached an agreement with the class in the ENGLE case,
which will provide assurance to Liggett that the stay of execution, currently in
effect under the Florida bonding statute, will not be lifted or limited at any
point until completion of all appeals, including to the United States Supreme
Court. As required by the agreement, Liggett paid $6.27 million into an escrow
account to be held for the benefit of the ENGLE class, and released, along with
Liggett's existing $3.45 million statutory bond, to the court for the benefit of
the class upon completion of the appeals process, regardless of the outcome of
the appeal. It is possible that additional cases could be decided unfavorably
and that there could be further adverse developments in the ENGLE case.
Management cannot predict the cash requirements related to any future
settlements and judgments, including cash required to bond any appeals, and
there is a risk that those requirements will not be able to be met.

In recent years, there have been a number of restrictive regulatory
actions from various Federal administrative bodies, including the United States
Environmental Protection Agency and the Food and Drug Administration. There have
also been adverse political decisions and other unfavorable developments
concerning cigarette smoking and the tobacco industry, including the
commencement and certification of class actions and the commencement of
third-party payor actions. These developments generally receive widespread media
attention. We are not able to evaluate the effect of these developing matters on
pending litigation or the possible commencement of additional litigation, but
our consolidated financial position, results of operations or cash flows could
be materially adversely affected by an unfavorable outcome in any
smoking-related litigation.

LIGGETT HAS SIGNIFICANT SALES TO A SINGLE CUSTOMER

During the first nine months of 2001, 26.1% of Liggett's net sales,
30.1% of Liggett's net sales in the discount segment and 23.1% of our
consolidated revenues were to Liggett's largest customer. Liggett's contract
with this customer extends through March 31, 2005. If this customer discontinues
its relationship with Liggett or experiences financial difficulties, Liggett's
results of operations could be materially adversely affected.

EXCISE TAX INCREASES MAY ADVERSELY AFFECT CIGARETTE SALES

As part of the 1997 budget agreement approved by Congress, federal
excise taxes on a pack of cigarettes, which are currently 39 cents, were
increased at the beginning of each of 2000 and 2002. In general, excise taxes
and other taxes on cigarettes have been increasing. These taxes vary
considerably and, when combined with sales taxes and the current federal excise
tax, may be as high as $1.90 per pack in a given locality in the United States.
Congress has considered significant increases in the federal excise tax or other
payments from tobacco manufacturers, and increases in excise and other
cigarette-related taxes have been proposed at the state and local levels. A
substantial federal or state excise tax increase could accelerate the trend away
from smoking and could have an unfavorable effect on Liggett's sales and
profitability.

VECTOR TOBACCO IS SUBJECT TO RISKS INHERENT IN NEW PRODUCT DEVELOPMENT
INITIATIVES

We have made and plan to continue to make significant investments in
Vector Tobacco's development projects in the tobacco industry. Vector Tobacco is
in the business of developing and marketing new cigarette products designed to
both reduce cancer causing agents in cigarettes and to be free of nicotine.
These initiatives are subject to high levels of risk, uncertainties and
contingencies, including the challenges inherent in new product development.
There is a risk that continued investments in Vector Tobacco will harm our
profitability (if any) or liquidity or cash flow.

The substantial risks facing Vector Tobacco include:

RISKS OF MARKET ACCEPTANCE OF THE NEW PRODUCTS. Vector Tobacco has only
recently introduced its new reduced carcinogen OMNI cigarettes and has conducted
only limited testing of cigarettes produced from tobacco genetically modified to
produce a nicotine-free cigarette. Vector Tobacco's new nicotine-free product is
scheduled to be introduced in the second quarter of 2002. Reduced carcinogen and
nicotine-free cigarettes may not be accepted ultimately by adult smokers and may
not prove to be commercially successful products. Adult smokers may decide not
to purchase cigarettes made with reduced carcinogen and nicotine-free tobaccos
due to taste or other preferences, or due to the use of genetically modified
tobacco or other product modifications.

THIRD PARTY ALLEGATIONS THAT VECTOR PRODUCTS ARE UNLAWFUL OR BEAR
DECEPTIVE OR UNSUBSTANTIATED PRODUCT CLAIMS. Vector is engaged in the
development and marketing of new, reduced carcinogen and nicotine-free
cigarettes. However, reductions in these constituents have not yet been proven
to result in a safer cigarette. These products also produce tar, carbon
monoxide, other harmful by-products, and increased levels of nitric oxide. There
are currently no definitive governmental standards or parameters for these
products and product claims. There is a risk that federal or state regulators
may object to these products and claims as unlawful, and seek the removal of the
products from the marketplace, or significant changes to advertising claims.
Allegations by public health organizations and other tobacco manufacturers that
Vector Tobacco's products are unlawful, or that its public statements or
advertising contain misleading or unsubstantiated health claims or product
comparisons, may result in litigation. Vector Tobacco's defense against such
claims could require it to incur substantial expense and to divert significant
efforts of its scientific and marketing personnel. An adverse determination in a
judicial proceeding or by a regulatory agency could have a material and adverse
impact on Vector Tobacco's business, operating results and prospects.

POTENTIAL DELAYS IN OBTAINING ANY NECESSARY GOVERNMENT APPROVALS.
Vector Tobacco's business may become subject to extensive domestic and
international government regulation. Various proposals have been made for
federal, state and international legislation to regulate cigarette manufacturers
generally, and reduced constituent cigarettes specifically. The ultimate outcome
of these proposals cannot be predicted. It is possible that laws and regulations
may be adopted covering issues like the manufacture, sale, distribution and
labeling of tobacco products as well as any health claims associated with new,
reduced carcinogen and nicotine-free cigarette products and the use of
genetically modified tobacco. A system of regulation by agencies like the Food
and Drug Administration, the Federal Trade Commission or the United States
Department of Agriculture may be established. In addition, a group of public
health organizations have recently submitted a petition to the Food and Drug
Administration, alleging that the marketing of the OMNI product is subject to
regulation by the FDA under existing law. Any new laws or regulations or
applications of existing law of this type could significantly delay or obstruct
Vector Tobacco's further development and marketing of its new products or may
require it to incur significant expense in complying with any new regulation or
in obtaining any necessary government approvals.

COMPETITION FROM OTHER CIGARETTE MANUFACTURERS WITH GREATER RESOURCES.
The cigarette industry is highly competitive. Vector Tobacco's competitors
generally have substantially greater resources than Vector Tobacco has,
including financial, marketing and personnel resources. Brown & Williamson
Tobacco Corporation has recently announced it is test marketing a new cigarette
with reduced levels of many toxins. Other major tobacco companies have stated
that they are working on reduced risk, "safer" cigarette products and have made
publicly available only limited additional information concerning their
activities at this time. There is a substantial likelihood that other major
tobacco companies will continue to introduce new products that are designed to
compete directly with Vector Tobacco's reduced carcinogen and nicotine-free
products.

POTENTIAL DISPUTES CONCERNING INTELLECTUAL PROPERTY. Vector Tobacco's
ability to commercially exploit its proprietary technology for its reduced
carcinogen and nicotine-free products depends in large part on its ability to
obtain and defend issued patents, to obtain further patent protection for the
technology in the United States and other jurisdictions, and to operate without
infringing on the patents and proprietary rights of others both in the United
States and abroad. Additionally, it must be able to obtain appropriate licenses
to patents or proprietary rights held by third parties if infringement would
otherwise occur, both in the United States and in foreign countries.

Intellectual property rights, including Vector Tobacco's patents (owned
or licensed), involve complex legal and factual issues. Any conflicts resulting
from third party patent applications and granted patents could significantly

limit Vector Tobacco's ability to obtain meaningful patent protection or to
commercialize its technology. If necessary patents currently exist or are issued
to other companies that contain competitive or conflicting claims, Vector
Tobacco may be required to obtain licenses to these patents or to develop or
obtain alternative technology. Licensing agreements, if required, may not be
available on acceptable terms or at all. If licenses are not obtained, Vector
Tobacco could be delayed in or prevented from pursuing the further development
or marketing of its new cigarette products. Any alternative technology, if
feasible, could take several years to develop.

Litigation which could result in substantial cost may also be necessary
to enforce any patents to which Vector Tobacco has rights, or to determine the
scope, validity and unenforceability of other parties' proprietary rights which
may affect its rights. Vector Tobacco may also have to participate in
interference proceedings declared by the U.S. Patent and Trademark Office to
determine the priority of an invention or opposition proceedings in foreign
counties or jurisdictions, which could result in substantial costs. There is a
risk that its licensed patents would not be held valid by a court or
administrative body or that an alleged infringer would not be found to be
infringing. The mere uncertainty resulting from the institution and continuation
of any technology-related litigation, interference proceedings or oppositions
could have a material and adverse effect on Vector Tobacco's business, operating
results and prospects.

Vector Tobacco may also rely on unpatented trade secrets and know-how
to maintain its competitive position, which it seeks to protect, in part, by
confidentiality agreements with employees, consultants, suppliers and others.
There is a risk that these agreements will be breached or terminated, that
Vector Tobacco will not have adequate remedies for any breach, or that its trade
secrets will otherwise become known or be independently discovered by
competitors.

DEPENDENCE ON KEY SCIENTIFIC PERSONNEL. Vector Tobacco's business
depends for its continued development and growth on the continued services of
key scientific personnel. The loss of Dr. Robert Bereman, Vice President of
Chemical Research, or Dr. Mark A. Conkling, Vice President of Genetic Research,
could have a serious negative impact upon Vector Tobacco's business, operating
results and prospects.

ABILITY TO RAISE CAPITAL AND MANAGE GROWTH OF BUSINESS. If Vector
Tobacco succeeds in introducing to market and increasing consumer acceptance for
its new cigarette products, Vector Tobacco will be required to obtain
significant amounts of additional capital and manage substantial volume from its
customers. There is a risk that adequate amounts of additional capital will not
be available to Vector Tobacco to fund the growth of its business. To
accommodate growth and compete effectively, Vector Tobacco will also be required
to attract, integrate, motivate and retain additional highly skilled sales,
technical and other employees. Vector Tobacco will face competition for these
people. Its ability to manage volume also will depend on its ability to scale up
its tobacco processing, production and distribution operations. There is a risk
that it will not succeed in scaling its processing, production and distribution
operations and that its personnel, systems, procedures and controls will not be
adequate to support its future operations.

POTENTIAL DELAYS IN OBTAINING TOBACCO, OTHER RAW MATERIALS AND ANY
TECHNOLOGY NEEDED TO PRODUCE NEW PRODUCTS. Vector Tobacco is dependent on third
parties to produce tobacco and other raw materials that Vector Tobacco requires
to manufacture its new products. In addition, the growing of new tobacco and new
seeds is subject to adverse weather conditions. Vector Tobacco may also need to
obtain licenses to technology subject to patents or proprietary rights of third
parties to produce its products. The failure by such third parties to supply
Vector Tobacco with tobacco, other raw materials and technology on commercially
reasonable terms, or at all, in the absence of readily available alternative
sources, would have a serious negative impact on Vector Tobacco's business,
operating results and prospects. There is also a risk that interruptions in the
supply of these materials and technology may occur in the future. Any
interruption in their supply could have a serious negative impact on Vector
Tobacco.

NEW VALLEY'S POTENTIAL INVESTMENTS ARE UNIDENTIFIED AND MAY NOT SUCCEED

New Valley currently holds a significant amount of marketable
securities and cash not committed to any specific investments. This subjects you
to increased risk and uncertainty because you will not be able to evaluate how
this cash will be invested and the economic merits of particular investments.
There may be substantial delay in locating suitable investment opportunities. In
addition, New Valley may lack relevant management experience in the areas in
which New Valley may invest. There is a risk that New Valley will fail in
targeting, consummating or effectively managing any of these investments.

NEW VALLEY MAY BECOME SUBJECT TO BURDENSOME REGULATION UNDER THE INVESTMENT
COMPANY ACT

Following the recent distribution of the Ladenburg shares and asset
dispositions in Russia, New Valley is engaged in the real estate business and
holds a significant amount of cash and marketable securities which it may be
required to reinvest in operating companies in the near future in order to avoid
potentially burdensome regulation under the Investment Company Act of 1940. The
Investment Company Act and its regulations generally impose substantive
restrictions on a company that owns "investment securities" having a value in
excess of 40% of the company's "total assets". New Valley, which is now above
this threshold following the distribution of the Ladenburg shares and asset
dispositions in Russia, has been relying since December 2001 on the one-year
exemption from registration under the Investment Company Act provided by Rule
3a-2. New Valley will attempt to be engaged, within the one-year period
prescribed by Rule 3a-2, primarily in a business or businesses other than that
of investing, reinvesting, owning, holding or trading in securities. However,
there is a risk that New Valley will not be successful in becoming engaged in
such business and will become subject to the Investment Company Act. If New
Valley were required to register under the Investment Company Act, it would be
subject to a number of severe substantive restrictions on its operations,
capital structure and management. For example, it would be prohibited from
entering into principal transactions and joint transactions with affiliates. It
would also be prohibited from issuing convertible securities and options and
would be subject to limitations on leverage.

WE DEPEND ON OUR KEY PERSONNEL

We depend on the efforts of our executive officers and other key
personnel. While we believe that we could find replacements for these key
personnel, the loss of their services could have a significant adverse effect on
our operations. We do not maintain key-man life insurance for any of our
personnel.

WE AND NEW VALLEY HAVE MANY POTENTIALLY DILUTIVE SECURITIES OUTSTANDING

We have outstanding warrants expiring in 2003 to purchase 121,623
shares of our common stock, at a price of $4.18 per share. In 1998, we granted
options expiring in 2003 for shares of our common stock, at a price of $5.18 per
share, to a law firm that represents us, Liggett and New Valley, of which
options for 591,281 shares are currently outstanding and exercisable. At
December 31, 2001, we had outstanding options granted to employees to purchase
10,678,774 shares of our common stock, at prices ranging from $.87 to $43.95 per
share, of which options for 5,726,266 shares are exercisable during 2002. The
issuance of these shares will cause dilution which may adversely affect the
market price of our common stock. The availability for sale of significant
quantities of our common stock could adversely affect the prevailing market
price of the stock.

As part of New Valley's recapitalization, a total of 17,898,629
warrants to purchase common shares were issued to New Valley's stockholders. The
potential issuance of common shares on exercise of the warrants would increase
the number of New Valley's common shares outstanding by more than 80% and
decrease our holdings.

OUR STOCK PRICE HAS BEEN VOLATILE

The trading price of our common stock has fluctuated widely, ranging
between $17.90 and $45.95 per share over the past 52 weeks. The overall market
and the price of our common stock may continue to fluctuate greatly. The trading
price of our common stock may be significantly affected by various factors,
including:

o the depth and liquidity of the trading market for our common stock,

o quarterly variations in its actual or anticipated operating results,

o changes in investors' and analysts' perceptions of the business and
legal risks facing us and the tobacco industry,

o changes in estimates of our earnings by investors and analysts, and

o announcements or activities by our competitors.

WE WILL HAVE BROAD DISCRETION WITH RESPECT TO THE USE OF PROCEEDS FROM OUR JULY
2001 NOTE OFFERING

The net proceeds of our July 2001 note offering were approximately $166
million. Our management will retain broad discretion as to the use and
allocation of the proceeds. Accordingly, you will not have the opportunity to
evaluate the economic, financial and other relevant information that we may
consider in the application of the net proceeds.

FORWARD LOOKING STATEMENTS

In addition to historical information, this prospectus contains
"forward-looking statements" within the meaning of the federal securities law.
Forward-looking statements include information relating to our intent, belief or
current expectations, primarily with respect to, but not limited to:

o the use of the proceeds from our July 2001 note offering,

o economic outlook,

o capital expenditures,

o cost reduction,

o cash flows,

o operating performance,

o litigation, and

o related industry developments (including trends affecting our
business, financial condition and results of operations).

We identify forward-looking statements in this prospectus by using
words or phrases such as "anticipate", "believe", "estimate", "expect",
"intend", "may be", "objective", "plan", "predict", "project" and "will be" and
similar words or phrases or their negatives.

The forward-looking information involves important risks and
uncertainties that could cause our actual results, performance or achievements
to differ materially from our anticipated results, performance or achievements
expressed or implied by the forward-looking statements. These risks and
uncertainties include the risk factors discussed above under "Risk Factors" and
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference into this prospectus.

Although we believe the expectations reflected in these forward-looking
statements are based on reasonable assumptions, there is a risk that these
expectations will not be attained and that any deviations will be material. We
disclaim any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained in this prospectus to reflect any
changes in its expectations or any change in events, conditions or circumstances
on which any statement is based.

SELLING STOCKHOLDER

The shares registered under the registration statement of which this
prospectus is a part are being offered for the account of Jefferies & Company,
Inc., or its transferees, pledgees or donees. Jefferies acquired the 170,000
shares of our common stock offered in this prospectus from us, in connection
with Jefferies' conversion on December 11, 2001 of $35,000,000 principal amount
of our 6.25% convertible notes due July 15, 2008 and Jefferies' conversion on
December 13, 2001 of $5,000,000 principal amount of the convertible notes. In
addition to the 1,188,353 shares of our common stock issuable upon conversion of
the notes, we issued Jefferies 148,750 shares of our common stock on December
11, 2001 and 21,250 shares on December 13, 2001 and paid Jefferies a total of
$1,085,938 of accrued interest on the bonds converted. The additional shares and
accrued interest were issued as an inducement to Jefferies to convert the notes.
The closing prices of our common stock on The New York Stock Exchange on
December 11, 2001 was $38.40 per share and on December 13, 2001 was $33.25 per
share.

As of February 4, 2002, Jefferies beneficially owned 280,458 shares
(0.8%) of our common stock, including 110,458 shares issuable upon conversion of
$3,718,000 principal amount of the convertible notes.

Jefferies was the initial purchaser of our offering of $172,500,000 of
convertible notes in July 2001. Jefferies or its affiliates have from time to
time provided investment banking, general financing and banking services to us
and our affiliates, for which they have received customary compensation.

PLAN OF DISTRIBUTION

Any distribution of the shares by the selling stockholder, or by the
selling stockholder's transferees, pledges or donees, may be effected from time
to time in one or more of the following transactions:

o to underwriters who will acquire the shares for their own account
and resell them in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers may
be changed from time to time),

o through brokers, acting as principal or agent, in transactions
(which may include block transactions) on The New York Stock
Exchange, in special offerings, exchange distributions under the
rules of the applicable exchanges or in the over-the-counter market,
or otherwise, at market prices prevailing at the time of sale, at
prices related to prevailing market prices, at negotiated prices or
at fixed prices, or

o directly or through brokers or agents in private sales at negotiated
prices, or by any other legally available means.

Unless otherwise disclosed in any prospectus supplement, the obligations of any
underwriter to purchase shares will be subject to conditions precedent and the
underwriters will be obligated to purchase all of the shares, if any are
purchased, and any agent will be acting on a best efforts basis during its
appointment.

The selling stockholder and these underwriters, brokers, dealers or
agents may be considered "underwriters" as that term is defined by the
Securities Act.

Underwriters participating in any offering made pursuant to this
prospectus (as amended or supplemented from time to time) may receive
underwriting discounts and commissions, and discounts or concessions may be
allowed or reallowed or paid to dealers, and brokers or agents participating in
transactions may receive brokerage or agent's commissions or fees.

At the time a particular offering of shares is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
amount of shares being offered and the terms of the offering, including the
purchase price or public offering price, the name or names of any underwriters,
dealers or agents, the purchase price

paid by any underwriter for shares purchased from the selling stockholders, any
discounts, commissions and other items constituting compensation from the
selling stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.

To comply with the securities laws of some states, if applicable, the
shares will be sold in those jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the shares may not be sold
unless the shares have been registered or qualified for sale in that state or an
exemption from registration and qualification is available and complied with.

All costs, expenses and fees for the registration of the shares will be
borne by us. Commissions and discounts, if any, attributable to the sale of the
shares will be borne by the selling stockholder. The selling stockholder may
agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares against liabilities, including
liabilities arising under the Securities Act.

EXPERTS

The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 2000 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.

VALIDITY OF SHARES

The validity of the shares offered by this prospectus is being passed
on for us by Richard J. Lampen, Esq., our Executive Vice President and Special
Counsel. Mr. Lampen holds an option to purchase 199,493 shares of our common
stock at an exercise price of $4.32 per share and an option to purchase 110,250
shares at an exercise price of $14.00.

We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person does make a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in this prospectus
is complete and accurate as of its date, but the information may change after
that date.

TABLE OF CONTENTS

PAGE
----

Where You Can Find More Information..................... 2
Prospectus Summary...................................... 3
Risk Factors............................................ 4
Forward-Looking Statements.............................. 10
Selling Stockholder..................................... 11
Plan of Distribution.................................... 11
Experts................................................. 12
Validity of Shares...................................... 12

VECTOR GROUP LTD.

170,000 SHARES
OF COMMON STOCK

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth various expenses, payable by us on
behalf of the selling stockholder in connection with the offering. Other than
the SEC registration fee, the amounts set forth below are estimates:

SEC registration fee.............................. $ 426
Legal fees and expenses........................... 5,000
Accounting fees and expenses...................... 5,000
Miscellaneous..................................... 1,574
--------
Total.............................. $ 12,000
========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law and Article VI of
our By-Laws provide for indemnification of our directors and officers in a
variety of circumstances, which may include liabilities under the Securities Act
of 1933.

Section 102 of the Delaware General Corporation Law allows a
corporation to eliminate the personal liability of a director of a corporation
to the corporation or to any of its stockholders for monetary damage for a
breach of his fiduciary duty as a director, except in the case where the
director (i) breaches his duly of loyalty, (ii) fails to act in good faith,
engages in intentional misconduct or knowingly violates a law, (iii) authorized
the payment of a dividend or approves a stock repurchase in violation of the
Delaware General Corporation Law or (iv) obtains an improper personal benefit.
Article Eighth of our Amended and Restated Certificate of Incorporation includes
a provision which eliminates directors' personal liability to the full extent
permitted under the Delaware General Corporation Law, as the same exists or may
hereafter be amended.

ITEM 16. EXHIBITS.

The following documents are filed as a part of this registration
statement or incorporated by reference herein:

EXHIBIT
NO. DESCRIPTION
------- -----------

5 Opinion of Richard J. Lampen, Esq.

23.1 Consent of PricewaterhouseCoopers LLP

23.2 Consent of Richard J. Lampen, Esq. (included in Exhibit 5).

24.1 Power of Attorney (on signature page).

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ITEM 17. UNDERTAKINGS.

(a) The Company hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low and high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation or Registration Fee"
table in the effective registration statement.

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement;

(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense or any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Miami, and State of Florida, on the
5th day of February, 2002.

VECTOR GROUP LTD.

By: /s/ Joselynn D. Van Siclen
-----------------------------
Joselynn D. Van Siclen
Vice President, Treasurer and
Chief Financial Officer

The registrant and each person whose signature appears below hereby
authorizes Richard J. Lampen, Joselynn D. Van Siclen and Marc N. Bell (the
"Agents"), with full power of substitution and resubstitution, to file one or
more amendments (including post-effective amendments) to the Registration
Statement which amendments may make such changes in the Registration Statement
as such Agent deems appropriate, and the registrant and each such person hereby
appoints each such Agent as attorney-in-fact to execute in the name and on
behalf of the registrant and each such person, individually and in each capacity
stated below, any such amendments to the Registration Statement.

Pursuant to the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed below by the following
persons in the capacities indicated on February 5, 2002.

/s/ Bennett S. Lebow Chairman of the Board of
--------------------------- Directors and Chief Executive
Bennett S. LeBow Officer (Principal Executive Officer)

/s/ Joselynn D. Van Siclen Vice President, Chief Financial
--------------------------- Officer and Treasurer (Principal
Joselynn D. Van Siclen Financial Officer and Principal
Accounting Officer)

/s/ Robert J. Eide Director
---------------------------
Robert J. Eide

/s/ Howard M. Lorber Director
---------------------------
Howard M. Lorber

/s/ Jeffrey S. Podell Director
---------------------------
Jeffrey S. Podell

/s/ Jean E. Sharpe Director
---------------------------
Jean E. Sharpe

II-3