M.A. Schapiro & Co., which was the first investment banking firm to make a market in bank stocks, may close its doors by yearend.

The company's chairman, George Reycraft, confirmed that the company was having "active discussions with a third party" but declined to elaborate.

Market sources said the privately held firm would close its brokerage business and sell its asset management operations to an international insurance company. Most of the company's staff-about 38 employees-would be let go, these sources said.

People familiar with the impending transactions say the company is being dismantled because its founder, Morris A. Schapiro, died last December. He was 93.

"The fact that Morris is no longer with us" is a factor, acknowledged Mr. Reycraft, who is heading the negotiations. "There are estate issues involved and the desires of other people involved."

Mr. Schapiro, who launched the firm in 1938, was behind some of the biggest bank deals of the 1950s. He is credited with helping Harry Keefe launch investment banking firm Keefe, Bruyette & Woods in 1962. Mr. Keefe, who now heads a hedge fund, said Mr. Schapiro gave him bank stocks to trade the day he opened.

"Then he said, 'O.K., kid, you're on your own,'" said Mr. Keefe. "We were friendly but very active competitors."

"It's a sad day for any bank analyst who has any sense of history," said veteran analyst George M. Salem of Gerard Klauer Mattison. "Morris Schapiro was the first bank stock analyst in the United States."

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