Some critics of the municipal bond industry are unfairly lumping minority firms together with small local companies accused of improper business dealings, the National Association of Securities Professionals has warned.

Officials at the association, a trade group representing minority-and women-owned securities professionals, said in interviews they are concerned that ongoing investigations improprieties in the industry will hurt minority firms and executives. They plan to come out with a policy statement later this year.

Much of the concern stems from federal and state investigations of several New Jersey bond offerings. The examinations were prompted by allegations that Armacon Securities, a small, politically connected, New Jersey-based firm, was included on underwriting syndicates and split profits with several large firms even though it did not sell any bonds.

While those probes have not been completed, they have prompted New Jersey to prohibit most negotiated underwriting of its bond issues. The limitation strains many small, regional firms and minority-or women-owned firms that do business in the state because they often cannot afford to participate in competitive underwritings.

Such bans on negotiated sales and their impact on minority-owned firms have association executives concerned that members' firms may wrongly be associated with actions prompting such restrictions.

"There's a perception that small and minority-owned firms can't handle the business. That's entirely inappropriate," said Raymond J. McClendon, chairman of the association and vice chairman of the investment banking firm Pryor, McClendon, Counts & Co.

At the association's annual meeting scheduled for Oct. 14-16 in Washington. D.C., a panel will discuss possible regulatory changes affecting the securities industry. In addition, the group hopes to release a policy statement on the issue.

The statement may also tackle the subject of political contributions, McClendon said.

"NASP wants its members to stand for excellence and the highest standards of performance. We want to make it clear that we want the business to be based on merit and performance, with a level playing field that provides opportunities to all," he said.

In taking on the subject of regulation of the tax-exempt market, the association joins other groups such as the Municipal Securities Rule-making Board, the Securities and Exchange Commission, and the Public Securities Association.

At a board of directors meeting in June, association executives expressed concerns that limits or prohibitions on certain types of municipal underwriting could prove detrimental to individual members as well as minority-owned firms.

"If you go on the merits completely, old-line traditionalists would have you believe that the majority firms are better able to provide service than the minority firms," said Alphonso E. Tindall Jr., chairman elect of the association and management partner of the New York City office of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel.

Regarding political contributions, Tindall said, "There's the presumption that we only get the business that we do because we support the candidates."

Tindall said that any widespread bans on investment bankers' political contributions might be detrimental because it could limit the field of political candidates to only those wealthy enough to run.

"NASP is trying to project itself as a real trade organization, and these are issues that will affect its members," said one board member who asked not to be named.

"Clearly our business is under public review. There are things out that will not make some people proud," the board member said.

Another issue that may concern association executives is a federal investigation into a recent Louisiana general obligation bond issue, and the profit-sharing arrangement on the deal between Lazard Freres & Co., First Boston Corp., and First Commonwealth Securities Corp.

The Federal Bureau of Investigation and the state treasurer's office are seeking to determine why Lazard Freres and First Boston shared profits with First Commonwealth, a minority-owned firm, which did not sell any bonds for the offering.

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