Regulators at the National Association of Securities Dealers are examining several possible violations of a new rule that restricts municipal market employees from making campaign contributions, including one that recently led to the firing of a Kidder, Peabody & Co. official.

At the moment, the NASD is conducting 25 "special exams," or spot checks, on firms complying with the campaign contribution rules. The findings are not yet available.

The NASD, a self-regulatory agency that monitors the securities industry, provides front-line enforcement of the rule, known as G-37. The Securities and Exchange Commission can also enforce the rule.

The rule, adopted by the Municipal Securities Rulemaking Board in April, is not a ban on campaign contributions. Instead, the rule prevents municipal executives from soliciting contributions in order to obtain municipal bond business.

The rule also allows municipal firm executives to make campaign contributions up to $250, but only to officials in their own voting district.

"We're looking at a lot of things," said Walter Robertson, the NASD's director of compliance. "Some of them concern matters just before the rule went into effect. We will discuss our findings with both the commission and the MSRB."

Robertson confirmed that the association compliance staff is investigating two cases that have made the news in recent weeks concerning possible rule violations in Florida.

One involved a $300 campaign contribution from a Tampa-based consulting firm to a county commissioner in Hillsborough County, Fla. The firm is partially owned by a Smith Barney Inc. managIng director, L. Garry Smith.

In addition, the NASD is examining a case involving a Kidder Peabody senior vice president who wrote a letter suggesting that he had planned to solicit campaign contributions for a county commissioner in Charlotte County, Fla. Last Thursday, Kidder fired the executive, Peter Zent.

Officials at Smith Barney as well as Kidder say that neither case represents a violation of G-37. Breaking the rule could lead to a firm being barred from doing business with an issuer who received a contribution.

Robertson would not comment on any other possible violations the NASD is following. He said if the NASD's regulatory arm believes a case merits enforcement action, it will refer the case to an association district office, such as the one in New York City, which has jurisdiction over Wall Street firms. The office decides if a rule has been violated.

The district office in New York City has 18 members, mostly representing areas of the securities industry other than the municipal market. One member, Richard D. Griffiths, president and chief executive officer of Roosevelt & Cross, is one of the few who works full-time in the municipal business. Griffiths could not be reached for comment.

Several industry watchdogs and executives speaking on the condition of anonymity said the NASD's enforcement mechanism remains too close to the industry it regulates. One bond lawyer said that he doubts that the rules can be vigorously enforced through the NASD, and that the SEC should play a greater role.

But NASD members say they are committed to making sure G-37 is obeyed.

New York District member Alan L. Davidson, president of Zeus Securities, a small brokerage operation located in Jericho, N.Y., says his knowledge of municipals isn't extensive, but his commitment to enforcing the rule is.

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