Sources involved in a dispute over a 1989 municipal swap executed by the Public Parking Authority of Pittsburgh say settlement discussions that began nearly a year ago are still under way and no litigation has yet been filed.

Merrill Lynch Capital Markets executed the swap on the authority's behalf in 1989, but an analysis of the deal last year by Gary Gray, a senior vice president at Lehman Brothers, charged Merrill with understating the risks and misrepresenting interest rate costs.

The problems cost the authority several hundred thousand dollars, Mr. Gray said.

In defense of the swap, Douglas Hamilton, a managing director at Merrill Lynch, told authority board members at a meeting last January that Mr. Gray's analysis was "fundamentally flawed."

"I really don't understand Gary's motivations here," Mr. Hamilton said, adding that the differences of opinion were "irreconcilable."

In April, the authority hired a prominent local attorney to represent it in the dispute, but no lawsuit has yet been filed.

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