The Massachusetts state attorney general's office and the U.S. Attorney's Office for the Massachusetts District have stepped up two separate investigations into the financial dealings of former First Albany Corp. vice chairman Mark S. Ferber, according to sources in the state.

A spokesman in the attorney general's office would neither confirm nor deny the existence of any investigation into Ferber, but several Boston-based investment bankers said they expect to be subpoenaed by Attorney General L. Scott Harshbarger in reference to their past relationships with Ferber.

Richard Welch, chief of the U.S. attorney's economic crimes division, would neither confirm nor deny the existence of an investigation.

A spokesman for Lazard Freres & Co., Ferber's former employer, said the state attorney general, the Massachusetts inspector general, and the U.S. attorney's office have all subpoenaed certain information from the firm in relation to Ferber.

The Federal Bureau of Investigation, the Massachusetts state inspector general, and the U.S. Securities and Exchange Commission are also reported to be investigating Ferber's dealings.

According to one source, who spoke on the condition of anonymity, the attorney general's office has requested all written records of transactions and correspondence involving Ferber from 1982 to the present in order to find out if Ferber should have been classified as a special state employee. State law requires such employees to disclose conflicts of interest.

The spokesman for Lazard said most of the requests dealt with the period after 1988, when Ferber started with the firm.

The attorney general has also requested information from the Massachusetts Industrial Finance Agency, the Massachusetts Port Authority, the Massachusetts Turnpike Authority, and the Massachusetts Water Resources Authority, some of which were once clients of Ferber.

Because Massachusetts authorities are quasi-governmental entities and subject to the Freedom of Information Act, it is not necessary to subpoena them for information.

In Massachusetts, a special state employee is required by law to make full financial disclosure to the state attorney general's office. Although a special state employee is not elected and does not necessarily face state legislative approval as a prerequisite for employment, the employee is required to disclose any possible financial conflicts of interest to the state.

Ferber was once considered one of the most influential financial advisers in New England. But last July, he was fired by First Albany for signing an undisclosed retainer agreement between former employer Lazard Freres and Merrill Lynch & Co. for three years.

Ferber, who served as the financial adviser for several state authorities, contended he did not fall under the umbrella of a special state employee. His attorney stated yesterday that Ferber had met all disclosure requirements and would be completely exonerated.

"Mark Ferber received extensive legal advice on the technical conflicts of interest laws from some of the most expert attorneys in Boston on the matter," said Thomas E. Dwyer Jr., partner at the Boston firm of Dwyer, Collora, & Gertner, which is representing Ferber. "There will never be an official allegation that Mark was in violation of Section 268-A of Massachusetts law."

Section 268-A spells out what is required of a special state employee. Dwyer said that the fact that Ferber was advised by a lawyer was sufficient for his defense.

Dwyer said he was "not the least bit concerned," about Ferber facing any intensive inquiries as part of any investigation. "Reliance on legal counsel is an absolute defense," Dwyer said.

Liz Lattimore, a spokeswoman for the state's Ethics Committee, said that "two-thirds of an Ethics Committee investigation," is done confidentially and she could neither confirm nor deny any investigation at this time.

She did say that, "at this time there is no public case against Mark Ferber."

Ferber encountered criticism this summer when it was learned that from 1989 to 1992 he was paid as much as $3 million to help Merrill Lynch market and structure some interest-rate swap transactions.

MWRA officials said Ferber did not fully disclose the terms of the contract. After they were disclosed, Ferber was dismissed by the MWRA's board of directors and was subsequently fired by First Albany.

In the late 1970s and early 1980s, Ferber worked as chief of the Senate's Ways and Means Committee. In his over 10 years in the municipal industry, he worked for Kidder, Peabody & Co.; CS First Boston Corp.; Lazard Freres; and First Albany.

Andrew MacMillan, a spokesman for First Boston, said the firm, as a practice, does not comment on subpoenas.

Ferber was also closely allied with former Boston Mayor Raymond F.Flynn, former state Treasurer Robert Q. Crane, and the president of the state Senate, William F. Bulger.

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