WASHINGTON - The Federal Reserve Board's inspector general is investigating an allegation that members of the central bank's staff informed Union Planters Corp. officials in advance that a pending merger would be approved.

The investigation centers on why chairman Benjamin W. Rawlins purchased more than 15,000 shares of Union Planters stock last November immediately before the Fed approved the Memphis bank's purchase of Grenada Sunburst System of Grenada, Miss.

J. Virgil Mattingly Jr., the Fed's general counsel, acknowledged the probe in an April 25 letter to Hubert Van Tol, executive director of the Mid-South Peace and Justice Center in Memphis. Mr. Van Tol filed the original complaint.

Union Planters spokesman Bill Andrews said the Fed investigated the charges and found nothing. "Nothing is going on," he said.

Fed Inspector General Brent Bowen declined comment. "I neither confirm, nor deny, nor tell anything about any of our investigations," Mr. Bowen said.

But, Mr. Van Tol said the investigation is still active. "The last I have heard it is open," said Mr. Van Tol, who last spoke to the inspector general's office in June. "They have not told me it is closed."

Attorneys who practice before the Fed said the chance of a leak was quite slim.

"It is incredibly unlikely to have happened," said Michael A. Greenspan, a partner at Thompson & Mitchell who served at the Fed in the 1970s. "There have been some instances where there have been leaks, and when the Fed found out about them those people were fired. Those stories are circulated widely at the Fed and people are cognizant of it."

Mr. Greenspan said it is far more likely that Union Planters officials knew the application would be approved because no one from the Fed alerted them to any problems.

"If you have not heard from the staff, then you can assume that you don't have a problem," he said. "You don't need a leak."

Mr. Van Tol raised the charge in a series of letters to the Fed this spring.

Mr. Van Tol said he discovered the purchases in a March 10 article on insider stock activity in The Commercial Appeal, a Memphis newspaper.

Also, Mr. Van Tol said he later learned that trading in Union Planters stock more than doubled during the three days immediately prior to the Fed's announcement. A similar spike occurred during the days immediately prior to the Fed's approval last October in the original application, he said.

Mr. Andrews, the Union Planters spokesman, said insider information is irrelevant. Both banks went through a number of mergers and were intimately familiar with the merger process, he said.

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