Elaine LaRoche, one of the highest ranking women executives in the municipal bond market, has left her post as director of Morgan Stanley's public finance unit to take a senior management position with the firm.

Effective immediately, LaRoche will serve as head of marketing, reporting directly to the firm's president, John J. Mack. She replaces Neal Garonzik, who will assume the newly-created position of head of North American and Latin American equities.

Wall Street observers say LaRoche's new job places her among the most powerful executives at the white-shoe investment banking house, where she will play an important role in company-wide decision making.

"This is definitely a big promotion," one Wall Street source said. Her office will be "on the management floor," he said.

The source, who asked not to be named, described LaRoche's job as a "management position" charged with making certain that orders from Mack and company chief executive officer Richard B. Fisher are carried out efficiently.

LaRoche's promotion also clears the way for the appointment of veteran investment banker Austin V. Koenen as head of Morgan's public-finance department.

Koenen has been a managing director with Morgan since 1988, with supervisory responsibilities for some of the firm's largest customers.

Neither LaRoche nor Koenen were available for comment. In a prepared statement, a company spokeswoman said: "Elaine and Austin have worked very closely for the last five years." LaRoche "looks forward to working with Austin and the public finance department in the years ahead," she said.

The moves, according to Wall Street observers, should bode well for Morgan's public finance unit, which has consistently ranked among the top 10 underwriting firms in the municipal bond market during the past five years..

LaRoche, who joined the firm in 1978 and took over as public finance head in 1988 as a managing director, is expected to emerge as a strong advocate for Morgan's municipal department in the firm's management hierarchy.

For his part, Koenen is considered one of the best investment bankers in the municipal market, with 20 years of experience, a wide range of clients, and a keen knowledge of business trends. Koenen served as chairman of the Public Securities Association, an industry trade group, in 1990, and as president of the Municipal Forum of New York in 1992.

So far in 1994, Morgan has served as bookrunning senior manager on $1.7 billion of municipal bond issues, ranking 10th in the industry, according to Securities Data Co. In 1993, Morgan served as bookrunner on issues worth $14 billion, for a seventh place ranking, according to Securities Data.

According to a firm memo dated May 12, LaRoche will remain active in municipal market activities and continue as the firm's representative with the PSA.

LaRoche is a member of the association's board of directors, and serves on the association's political action committee and securities steering committee.

As the firm's public finance chief, LaRoche has been outspoken on numerous industry issues. Even before federal regulators began wrestling with a ban on campaign contributions to state and local officials, LaRoche criticized the use of these so-called pay-to-play schemes to influence the selection of bond underwriters.

"She has challenged her colleagues on the tough issues," said PSA president Heather Ruth. "She's been vocal on a lot of issues. Her style is not to sit back and just listen to what everybody else is saying."

Before heading up the public finance department, LaRoche worked for Mack as marketing director for Morgan's fixed-income department. Koenen will report to Peter F. Karches, head of Morgan's fixed-income division.

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