The Securities and Exchange Commission's investigation of the municipal market widened this week with subpoenas going out to a host of small New Jersey issuers that did business with Consolidated Financial Management.

Issuers receiving the latest round of subpoenas included school districts in Absecon, East Greenwich, Elk Township, Evesham Township, Logan, Mantua, Perth Amboy, Point Pleasant, Tinton Falls, West Deptford, and West Long Branch.

Others subpoenaed included the Gloucester County Utilities Authority, the Gloucester County Improvement Authority, the Camden County Municipal Utilities Authority, the Bergen County Utilities Authority, the Passaic County Utilities Authority, and the Mercer County Improvement Authority.

All of the issuers subpoenaed hired Consolidated Financial Management as a financial adviser or consultant for work on municipal bond issues in the past three years. Many of the school district transactions were lease deals sold as certificates of participation.

Other issuers who worked with CFM could not be reached this week, but every issuer contacted by The Bond Buyer that had worked with CFM said it had been subpoenaed.

The New Jersey Turnpike Authority, the New Jersey treasurer's office, and Gov. Jim Florio's office were subpoenaed in April by the U.S. attorney's office in Manhattan in connection with the investigation. Merrill Lynch & Co. and First Boston Corp. have also been subpoenaed.

The National Association of Securities Dealers has asked for information about the case from Butcher & Singer/Wheat First Securities and Smith Barney, Harris Upham & Co. Both firms have worked on bond issues with Armacon Securities, a sister company of CFM.

Merrill Lynch said in April that it had found irregularities in a joint trading account it maintained with Armacon Securities. Merrill said the federal inquiry began after the firm notified federal investigators about the irregularities.

The latest round of subpoenas asks for information about issuers' and firms' dealings with Armacon Securities and CFM, officials who received them said. The subpoenas are requests for information, and do not imply wrongdoing by any of the parties involved.

Some said the subpoenas also ask about Nicholas Rudi, president of CFM and the owner of that firm and Armacon, and Joseph Salema, a former business associate of Rudi's and the former chief of staff to Florio, sources familiar with the requests said. Salema resigned his post last month because he said he felt the investigation would be a drag on the governor's re-election bid.

Some sources familiar with the new round of subpoenas said they ask for information concerning five Merrill Lynch officials. They include three officials that the company has put on administrative leave during the investigation: Michael Baumrin, Marsha Eisenberg, and Dennis Boyle. The other two are the former head of public finance, John Miller, and Carol Kostik, a vice president in public finance.

The new subpoenas are apparently the first time Kostik's name has appeared in connection with the case, but a spokesman for Merrill Lynch said he believes she was mentioned in the requests only because she was a member of the team that worked on the New Jersey Turnpike Authority refundings. He said Kostik "had no management responsibilities on the deal."

The spokesman said Kostik "is an employee in excellent standing with the firm."

Officials familiar with the subpoenas said they also ask for information about CitiState Advisors Inc., a Baton Rouge, La., financial advisory firm that also brokers bond reinvestment services.

Richard Walker, head of the SEC's New York office, declined to comment.

In the wake of the New Jersey investigation, the SEC has also sent requests for information about political contributions to approximately 70 bond firms. But the firms were not subpoenaed by the commission.

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