Lawyers representing the municipal market's largest players will soon present to federal regulators another revision of a historic, voluntary agreement to ban campaign contributions, sources with knowledge of the move say.

The revision, which will probably be delivered to the Securities and Exchange Commission sometime next week, follows months of negotiations between the commission and municipal market firms over how best to change the accord.

The private accord, passed in October 1993 by 17 of the market's largest firms, bans participants from making contributions to state and local officials who also choose bond underwriters. The accord was approved by SEC chairman Arthur Levitt Jr. and later expanded to include more than 50 market firms.

But the firms that joined the accord would now like to alter the agreement to more closely resemble contribution restrictions imposed in April by the market's self-regulator, the Municipal Securities Rulemaking Board.

The federal rule, which is the subject of a lawsuit challenging its constitutionality, is considered less onerous than the voluntary accord.

Unlike the federal restrictions, the private ban prohibits firm executives from making campaign contributions to state and local officials who also choose bond syndicates.

But under the revision, executives would be able to make contributions of up to $250 to state and local officials representing areas where the executives live --just like the MSRB's ban, known as G-37.

In addition, the proposed revisions to the private accord would alter the way firms report their executives' campaign contributions to more closely resemble the requirements mandated by the MSRB.

If the draft is approved by the commission, firms will have to report to federal regulators the campaign contributions of a smaller sphere of firm executives than the agreement previously required.

SEC chairman Levitt has not received the revision, and commission press officials said they will not have a comment on the proposal until he does. Industry officials have said no revisions will be made without Leviti's approval. One lawyer who has worked on the revision said: "We are ready to publish the revision next week."

The lawyer, who asked to remain anonymous, said the rule, when officially revised, would probably pass muster with the SEC chairman, who wants the private accord to remain in place at least until the constitutional challenge to the MSRB's rule is settled.

The new private ban is also important for what it leaves out. In June, the firms spearheading the private ban shocked SEC officials by submitting a revision that attempted to interpret several key provisions of the MSRB's ban.

Regulators, including those at the MSRB, have warned industry executives against interpreting G-37 and have refused to provide much insight into how they will enforce the rule's provisions.

Industry executives have complained that the MSRB rule is so broadly worded that many firm employees, such as retail brokers and their supervisors, who have limited contact with the firm's municipal bond operations, could no longer make campaign contributions. The federal rule was not intended to cover these executives, market officials maintain.

As a result, lawyers working to revise the private ban submitted to the commission a revision that attempted to specifically exclude many executives from the MSRB's restrictions, sources with knowledge of the issue say. Commission officials responded by saying that only the MSRB can interpret its rule. In turn, market lawyers scrapped that version of the proposed revision.

Following the recommendation of commission officials, market firms also revised their approach in dealing with federal regulators on issues regarding both bans. Market lawyers with knowledge of the issue say the Public Securities Association will now direct all questions regarding G37 to the MSRB. At the same time, the private ban will no longer attempt to interpret G-37.

In a letter dated July 11 but released yesterday, the PSA called on the MSRB to more clearly define which firm executives are covered by the board's contribution restrictions.

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