CHICAGO -- Sexual harassment complaints have cost Chicago-based Rodman & Renstlaw Inc. a place on the underwriting team for an upcoming bond issue by illinois.

The state yesterday pulled Rodman from a $150 million general obligation college saver bond issue just hours after it released a list that included Rodman as a co-manager. James Montana, Gov. Jim Edgar's chief legal counsel, said the move was made after the state learned of several sexual harassment complaints filed against the firm.

"Because the charges are out there and even though [Rodman] feels strongly that they haven't done anything wrong, we better wait until those charges are resolved to have them in a transaction," Montana said.

Montana said pulling Rodman from the deal did not constitute "a judgment" on the part of the state on the merits of the complaints, but merely reflected the administration's preference to have the complaints resolved before including Rodman in a deal.

Montana also said the action by the state regarding Rodman was not related to a new law that requires firms that enter into contracts with the state to certify they have written policies against sexual harassment.

"Even if there was no law, we would still be concerned about the allegations," Montana said.

Three sexual discrimination complaints have been filed against Rodman and several of its employees, including Mark Grant, the firm's vice president in charge of fixed-income.

The complaints were filed by Susan Jaskowski, a former vice president and human resources director, and Jeannine Finley and Linda Tienda. former trading and sales assistants at the firm.

In April, Finley flied a complaint with the Equal Employment Opportunity Commission and has requested permission to file a lawsuit in federal court.

Linda Friedman, an attorney for Finley and Jaskowski, said the commission has 180 days to commence an investigation into a complaint. After that time, the complainant can request permission from the commission to file a lawsuit in federal court.

Jaskowski filed a complaint with the commission in March 1991 and subsequently filed a sexual harassment and discrimination suit in the U.S. District Court for the Northern District of Illinois in June 1992. Tienda filed a sexual discrimination and harassment complaint with the Illinois Department of Human Rights in February 1992.

Montana said in addition to the sexual harassment problems, he is also concerned about recent "turmoil" at the firm. The beleaguered firm recently has been the center of takeover rumors. Last month the firm announced it has started a due diligence process to examine possible mergers or acquisitions of the firm.

The firm's board of directors also announced the adoption of a stockholder rights plan to protect the company against unfair or abusive takeover tactics or stock accumulation programs.

Greg Quinlivan, Rodman's general counsel and executive vice president, called the state's decision to pull the firm from the deal "unfortunate." He said the state was not treating Rodman, whose problems have been publicized in local and national newspapers, the same way it treats other firms that might also have sexual harassment complaints pending against them.

"I think it's unfortunate that ours are, publicized, while other firms avoid the press." Quinlivan said. "I don't necessarily agree with the state's stance on this. No one has been proven guilty or anything. It's a nice step to go through before convicting anyone or yanking the business from us."

He said the firm is fighting the complaints and said an outside law firm it hired found no merit to the claims.

Some officials contacted at the 27 underwriter and bond counsel firms selected by the state said that, given the size of some of the firms, it was conceivable that sexual harassment complaints could be pending against them. However, Montana said there are no plans to "do anything with respect to the other firms" because the state is not currently aware of any complaints filed against them.

Montana said another regional firm will be chosen to take Rodman's place on the deal, which is scheduled for pricing in early October. He said the senior managers and bond counsel for the two bond deals will be asked to certify that they have policies against sexual harassment in compliance with the new law, which took effect July 1.

He also said the state will probably ask firms bidding on competitive issues to certify they have policies as well.

The Edgar administration selected Prudential Securities as the bookrunner and First Chicago Capital Markets as the co-senior manager for the college saver GO issue. Co-managers are Dean Witter Reynolds; PaineWebber Inc.; Merrill Lynch; A.G. Edwards & Sons; Edward D. Jones; and KM Independence Group as the minority firm co-manager.

Firms were also chosen for a $300 million to $350 million Build Illinois sales tax revenue bond issue that will include new and refunded debt and that has a tentative pricing date of Sept. 15. Lehman Brothers was named senior manager along with co-managers Morgan Stanley; Smith Barney, Harris Upham & Co., Kidder Peabody; J.P. Morgan; First Boston; Chemical Securities Inc.; and Bear. Steams & Co.

The minority- and woman-owned firms of Artemis Capital Group; Smith Mitchell investment Group Inc.; Estrada Hinojosa; and Grigsby Brandford & Co. were also named as co-managers, as were the regional firms of Chicago Corp. and Clayton Brown & Associates Inc.

John Glennon, a managing director at Lehman, said the firm will have no problem meeting the certification for sexual harassment policies.

"Illinois is not the first state to adopt that. There are about a half dozen large cities or states doing that." he said. "You'll find most national firms are making those certifications. "

Mark Gallagher, a vice president at First Chicago, said his firm "has a comprehensive policy for dealing with sexual harassment in the workplace."

Officials from Prudential did not return phone calls.

The Edgar administration also chose law firms for the deals. Chapman & Cutler, which has handled legal matters for the state's GO bond issues for 20 years, will continue to serve as bond counsel on GO deals.

Earl Neal was picked as minority bond counsel for GO issues. Montana said underwriter counsel has not yet been decided.

For the Build Illinois bonds, the state selected Mayer, Brown & Platt as bond counsel, Jones Ware & Grenard as minority bond counsel and Sidley & Austin, which has been bond counsel for the issues in the past, was named underwriter counsel.

Officials at Chapman and Mayer, Brown & Platt said they will be able to certify they have sexual harassment policies.

Montana said that while the bond counsel firms will remain in place for the next two fiscal years, the underwriters were selected for only the two issues. That differs from the state's selection process in 1991, when firms were picked to do most of the state's bond business over a two-year cycle.

"It doesn't necessarily mean that one or more [firms] picked for the Build Illinois or college saver issue will be in the next transaction. They may be or may not be," he said.

Montana said the state will be putting together a short list of potential lead managers for future bond issues. He said that co-managers will be drawn from the 52 underwriter respondents to the request for qualifications the state sent out in May.

He said that campaign contributions from the firms "had nothing to do" with their selection, adding that the firms were picked with the intent of "spreading the business around."

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