David C. Clapp, one of the most influential executives in the municipal bond business, is expected to formally annonce his retirement from Goldman, Sachs & Co. tomorrow, sources at the firm say.

Clapp, a general partner and head of the firm's municipal bond department, served as 1993-94 chairman of the Municipal Securities Rulemaking Broad through September, shepherding the industry through one of its most turbulent periods in memory.

In the wake of municipal bond scandals in New Jersey, New York City, and Massachusetts, Clapp attempted to restore the image of the municipal business amid calls for tighter regulatory control of the market.

As MSRB chairman, Clapp helped draft a rule that restricts market executives from making contributions to state and local officials who also select bond underwriters.

He also helped push a voluntary ban on campaign contributions, along with Frank Zarb, formerly a high-ranking executive at Primerica Corp.

Firm executives say that Clapp will be replaced by general partner Michael D. McCarthy as the department head. It is unclear if the firm will announce McCarthy's promotion when it announces Clapp's retirement.

Clapp, 57, announced his resignation to Goldman Sachs employees at a meeting on Wednesday following widespread rumors that he planned to step down. The firm will likely draft a memo formally announcing the move tomorrow, a firm executive said.

Clapp, who could be not reached for comment, spent 23 years with the firm. He was elected a general partner at Goldman in 1978. He became head of the firm's municipal securities department in 1990, following the resignation of Robert N. Downey. After his retirement, Clapp will become a limited partner.

In addition to his impact on market regulation and practice, Clapp was widely regarded as among the best investment bankers in the municipal business. He is credited with starting the firm's health care group, and he also handled the firm's investment banking relationship with New York City, the municipal market's largest issuer.

Clapp's departure will come as Goldman goes through another management change. Stephen Friedman will resign as the firm's chairman at the end of November. He will be replaced by Jon Corzine.

The firm has also completed a largescale reduction of its municipal staff amid one of worse slumps in market history.

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