WASHINGTON - The Securities and Exchange Commission has been looking into possible trading abuses by the Chicago Corp. in noncompetitive bidding at Treasury auctions, the firm said yesterday.

Cantor Fitzgerald & Co. is also a target of the inquiry, sources said.

Perry Taylor, general counsel for Chicago Corp., said his firm has been the subject of an SEC inquiry initiated in late 1991 into various bidding activities in the noncompetitive market.

"Off and on with no particular intensity we've spent the last couple years trying to talk with them about why these practices were consistent with the applicable standards at the time," said Taylor.

Taylor declined to specify what types of trading practices federal regulators are questioning or if he expects the firms to reach a settlement with the SEC. But, he said, "any differences that we might have with the SEC are going to be resolve,d by agreement."

Chicago Corp. stopped participating in the noncompetitive market in early 1991, before the SEC inquiry was launched.

The inquiry also involves Cantor Fitzgerald, which is part of Cantor Fitzgerald Securities Corp., the large interdealer broker, sources said yesterday.

A spokesman for Cantor could not be reached for comment. However, during 1990 and 1991 Cantor employees and their relatives routinely purchased Treasury securities through noncompetitive bids, according to correspondence that the firm had with the House Energy and Commerce subcommittee on telecommunication and finance.

In several instances, the securities were resold to First Nevada Associates, a limited partnership with ties to Cantor Fitzgerald Inc.

Attorneys for Cantor told the subcommittee that the purchases and resale of the securities complied with Treasury guidelines and were wholly within the law. Under Treasury rules at the time, small bidders could get up to $1 million of a government security at the average yield determined by the auction. The limit has since been raised to $5 million for Treasury notes and bonds.

Attorneys also told the subcommittee that First Nevada got the securities at open market prices and "derived no advantage" by getting them at noncompetitive yields from customers.

According to the joint report on the Treasury market issued by federal regulators after the Salomon Brothers Inc. bidding scandal came to light, dealers often skirted Treasury noncompetitive bidding rules by arranging to purchase large amounts of securities for their own account. In many cases, employees of the firm got the securities and then resold them shortly after the auction.

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