Last November, while a hurricane bore down on banker brokerage executives at a conference in Orlando, a top securities regulator unleashed a maelstrom of her own.

R. Clark Hooper, vice president for advertising at the National Association of Securities Dealers, stunned the crowd by proposing a new regulatory regime for bank brokerage affiliates.

Bankers swiftly criticized the plan, saying its proposed limits on referral fees, in-branch advertising, and cross-marketing would decimate their fledgling investment sales efforts. Some even claimed the NASD, a trade association that sets professional standards for the brokerage industry, was determined to regulate bank brokerages out of business.

But now, as the trade group puts the finishing touches on the plan, the storm has all but blown over. The revised proposal, which the NASD's board of governors is expected to approve at a Sept. 18-19 board meeting, "will be more to everyone's liking," said a bank brokerage executive who has seen the changes.

Observers say the NASD, after some early missteps, made a concerted effort to reach out to the banking industry - notably through the creation last spring of an advisory committee on bank brokerage affiliates.

The NASD's initial proposal "was more of a panicked response than was necessary or appropriate," said Robert Kurucza, a law partner with Morrison & Foerster, Washington. "Hopefully, history will show the trolley went off the tracks but was able to get back on again."

NASD officials did not return repeated phone calls to discuss the development of the revised rules. A spokesman said the officials prefer to wait until Sept. 20, the day after the board of governors votes. The plan would then go to the Securities and Exchange Commission for another round of debate and public comment.

Copies of the revised proposal could not be obtained. But industry executives who have seen the document said a key change is that the new version defers on a number of points to joint guidelines that federal bank regulatory agencies issued last year.

For instance, the new NASD rule is said to let bank regulators supervise practices like in-branch advertising of brokerage activities.

Bankers had been particularly critical of parts of the proposal that duplicated banking regulators' guidelines, arguing that the practices that the NASD was worried about were already being policed by the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corp.

Brokerage executives at banks said they were pleased with indications that the NASD's rules will be more in sync with existing bank regulatory guidelines.

"This is an absolute relief," said Dan Phillips, vice president for mutual fund sales at First Commerce Corp., New Orleans. "Having some sort of conformity will make it much easier for us to operate."

The NASD proposals are also expected to back away from another hot button: banning brokers from using information about bank customers to gather leads. It's been accepted that "the sharing of bank information is in the banks' purview, not the NASD's," said one executive familiar with discussions between the bank brokerage committee and NASD staff.

Changes "were inevitable" once the NASD decided to form the bank brokerage committee, said Melanie Fein, law partner at Morrison & Foerster, Washington.

The panel, which includes 10 executives from bank-affiliated brokerages and two from companies that deal extensively with banks, met three times in person and once by teleconference to hammer out changes with NASD staff.

The group also waded through nearly 300 public comment letters, which were overwhelmingly critical of the NASD's plans.

Observers said the NASD began softening its stance on bank brokerage activities in the summer, when it eased rules that had banned bank brokerages from using bank logos on promotional materials.

Banks' battle over brokerage guidelines many not end with the NASD's revised proposal, however.

Philip A. Feigin, president of the North American Securities Administrators Association, has been closely monitoring the NASD's progress, and said he is not pleased by the latest indications.

Mr. Feigin, who is also Colorado's securities commissioner, said the state securities regulators group could set its own standards for policing bank brokerages if the NASD adopts a lenient approach.

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