WASHINGTON -- A closely watched legal dispute pitting consumer privacy rights against the obligation of financial institutions to report potential criminal activity will not go to trial.

The parties in MacLean v. Riggs National Bank settled the case late last month, according Michael Crotty, the American Bankers Association deputy general counsel.

Both sides will drop competing claims. No money will exchange hands, Mr. Crotty said.

The decision leaves unsettled the question of which law takes precedence. But, the issue could become clearer once a Texas court decides a similar case later this year. As part of the deal filed in U.S. District Court for the District of Columbia, Norbert Basil MacLean agreed to drop his claim that the bank invaded his right to privacy when it reported to federal officials that he had kited checks.

Mr. MacLean had charged that Riggs violated the Right to Financial Privacy Act in 1991 when its officials completed a criminal referral form to report Mr. MacLean's activity to law-enforcement agencies.

The privacy act forbids banks to disclose most financial information about its customers, but provides an exception for information that banks must reveal under another law or regulation. The question then becomes whether the bank limited the disclosure to the information required by the Bank Fraud Statute.

The bank filed a countersuit in March, charging Mr. MacLean with fraud and breach of contract.

Riggs charged in court documents that Mr. MacLean knowingly deposited two checks totaling $1,650 that were drawn upon other institutions from accounts that he knew were closed.

It also contended that he withdrew nearly $1,400 from his Riggs' accounts even though he knew that he did not have sufficient funds to cover his transactions.

Riggs associate general counsel. Linda Madrid did not return a call seeking comment. The bank's outside lawyer, Ellen M. Jakovic of Shaw, Pittman, Ports & Trowbridge, declined to comment.

Mr. MacLean, who lists addresses in Tampa, Fla., and Washington, could not be reached for comment.

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