Kidder, Peabody & Co. has fired a high-ranking municipal bond executive following reports that the executive planned to solicit campaign contributions for a county official in Florida.

On Friday, Kidder announced the firing of Peter Zent, a senior vice president in the firm's Tampa office. The action stems from an Aug. 24 letter from Zent to Charlotte County commissioner Richard Leonard.

"Please invite me to one of your fund-raisers before your re-election," Zent wrote to Leonard. "Perhaps I could bring some of my friends from Little Gasparilla Island who might like to contribute to your campaign."

The letter also mentioned that Charlotte County has financing needs within the next four years, and that Zent could "probably get Kidder Peabody or General Electric interested in a contribution." Kidder is owned by GE.

The letter raises questions, according to securities regulators. Under new campaign contribution restrictions imposed by the Municipal Securities Rulemaking Board, municipal executives are barred from soliciting contributions for state and local officials who also select underwriters on bond deals.

In announcing Zent's firing, a Kidder executive said in a prepared statement: "The letter was inconsistent with our policy of conforming with the various rules regarding campaign contributions." The executive added that Zent's employment with the firm was "terminated effective Thursday."

Kidder made no contributions, according to the executive, and did not violate the MSRB rule. Breaking the rule could lead to the firm's being banned from doing business with an issuer that received an improper contribution.

The firing appears to mark the first time a municipal bond underwriter has taken action against one of its employees following a possible violation of the new campaign contribution statutes.

Known as G-37, the rule limits campaign contributions from municipal executives to state and local officials. The rule also prevents executives from soliciting campaign contributions for issuers of municipal bonds, or devising schemes to fund issuers through indirect contributions.

Christopher Taylor, the rulemaking board's executive director, said he forwarded the matter to regulatory officials at the National Association of Securities Dealers. The NASD provides front-line enforcement of the MSRB's contribution rules.

"We have a rule out there, and it's very clear about solicitations," Taylor said. "This clearly raises questions about solicitation."

Taylor said he has forwarded to the NASD many other examples of questionable practices among municipal bond firms.

In August, The Bond Buyer reported that a Tampa-based consulting finn owned by a Smith Barney Inc. managing director made a campaign contribution to a Hillsborough County, Fla., commissioner.

Smith Barney says the executive, L. Garry Smith, did nothing wrong, but on Friday, Taylor confirmed that he alerted the NASD to the matter.

The NASD could not be reached for comment.

Zent's firing also comes at a difficult time for Kidder. The large Wall Street firm is under close scrutiny these days following a scandal in its government bond department.

In April, the firm announced that its chief government trader, Joseph Jett, generated million of dollars in fictitious profits. The firm then fired a number of its top managers.

Another Kidder executive, speaking on the condition of anonymity, said the swiftness of Zent's firing is directly related to the government bond scandal and the bad press it has forced Kidder to endure. "He made this mistake at a wrong time at Kidder," the executive said.

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