The death of WR Lazard's founder this week comes as both the Securities and Exchange Commission and the Manhattan district attorney's office continue probes encompassing various aspects of his firm's business dealings with a troubled New York State agency.

Wardell Lazard, who was found dead Wednesday in Pittsburgh, is not a target of the investigations, but a source with knowledge of the SEC's probe said that this firm, WR Lazard & Co., is being examined on several fronts.

The SEC is examining WR Lazard's ties to the New York State Job Development Authority, which is already under investigation by the Manhattan district attorney's office and the New York State inspector general's office for its relationship to WR Lazard, officials at the two agencies confirmed.

William McLucas, chief of the SEC's enforcement division, refused to comment, but a source with knowledge of the matter confirmed the agency's investigation and said it may involve other matters besides Lazard's relationship with the Job Development Authority.

The district attorney's investigation, according to law enforcement officials and lawyers involved in the case, concerns the firm's role as senior manager authority bond issues, its role in several agency swap deals, and as a provider of brokerage services for the authority.

The Manhattan district attorney's investigation, law enforcement sources said, was sparked by a lawsuit file against the authority by James K. Blaine, the agency's former chief financial officer and treasurer.

In the lawsuit, Blaine charges he was fired by the authority 's president, Audrey Bynoe, in part because he criticized the relationship between the authority and Lazard, which he said cost the agency money.

Blaine also criticized other agency practices.

The charges also led to an ongoing New York State inspector general's office investigation into the Job Development Authority. Authority officials confirmed that the inspector general's office is investigating a number of issues, but a spokeswoman refused to be specific. In the lawsuit, Blaine said that Bynoe and authority staff members received interest-free loans from the agency, and that agency fund were used to pay Bynoe's personal parking tickets while using an authority car.

Through her attorney, Bynoe denied any wrongdoing.

As for WR Lazard, a spokesman for the district attorney's office confirmed that investigators are reviewing a December 1991 swap, in which a swap provider paid Lazard $548,000 as an "agent" on the transaction. Investigators want to know "what work was performed to warrant payment of these fees," the spokesman said.

The district attorney's investigation also encompasses other transactions between the Job Development Authority and Lazard, the spokesman said, but declined to elaborate.

According to Securities Data Co., WR Lazard has served as senior manager on four of the authority's last five negotiated bond transactions.

Robert Plotkin, WR Lazard's attorney, described the investigation by the district attorney's office as "very inactive." Plotkin said the district attorney's office subpoened the firm about six months ago, requesting information on all its dealings with the authority. He said the firm has not heard from the district attorney's office since. He said he was not aware of the SEC inquiry.

Regarding the allegations in Blaine's lawsuit, Plotkin said: "It's all innuendo and hearsay. It's like a Kennedy conspiracy theory."

When asked if the district attorney's probe included all aspects of the firm's relationship with the authority, Plotkin said: "We were asked to provide records relating to the relationship with the JDA. To the extent that the relationship with the JDA includes things beyond swaps, then [the investigation] would include everything."

The Swaps

The investigators are reviewing several derivatives transactions involving Lazard and the authority that are mentioned in Blaine's lawsuit, sources familiar with the investigation said.

The Manhattan district attorney's office confirmed yesterday that one of the transactions being investigated is a $50 million interest rate swap that the Job Development Authority entered with Sumitomo Capital Markets Corp. in December 1991. Wr Lazard was paid $548,360 by Sumitomo for acting as an "agent" on the swap.

Swap professionals said yesterday that the usual payment for a $50 million, three-year maturity swap is about four to five basis points, or about $70,000.

"This is an unheard of amount," one swap market professional said yesterday.

On the same date, the authority entered an identical swap with J.P. Morgan Capital Markets. Lazard did not act as an agent on the second swap, and received no fee. The fixed rate that J.P. Morgan charged the authority was 4.40%, considerably less than the 4.85% rate charged by Sumitomo.

Swap professional said they were also surprised by the difference in price between the two identical swaps. The difference in price on such a transaction would typically be 10 to 20 basis points.

"Are you kidding?," one swap professional said yesterday. "That's a 45 basis point spread on thee-year swap. That's crazy."

Sumitomo officials declined to comment on the transactions and the investigation. But the bank released a statement yesterday expressing sorrow over the death of Wardell Lazard. "It would be inappropriate to comment at this time," the statement said.

The Job Development Authority received bids from Merrill Lynch & Co. and Lehman Brothers for the swap that were lower than the Sumitomo bid, according to Blaine's complaint. But Blaine alleged that Bynoe, president of the authority, insisted that the authority accept the swap bid from Lazard and Sumitomo.

The authority, in a brief filed in response to Blaine's complaint, denied Blaine's description of the swap selection process.

The complaint also criticized later swap transactions. In April 1992, the authority entered a forward swap with Sumitomo. Blaine charged that Lazard again received an agent fee and Bynoe "insisted on not getting any other bids."

In January 1993, the authority sought to terminate its forward swap. Blaine charges that Bynoe insisted that the termination be done through Lazard instead of directly with Sumitomo. "There was no legitimate purpose for using Lazard as agent and receiving less proceeds for the execution of the January 1993 transaction," Blaine said in his complaint.

In August 1992, the authority entered a $35 million, seven-month swap with Banker's Trust. Lazard acted as agent and received $69,500 from Banker's Trust Co., according to the authority's confirmation record of the swap field as an exhibit in the Blaine lawsuit.

"We have no knowledge of this investigation and therefore cannot comment," a spokeswoman at Banker's Trust said yesterday.

Again, swap professionals said the $69,500 fee was extremely high for such a transaction. "That's about 35 basis points," one professional said. "The market standard is five basis points. I've never heard of one as high as 10 points."

The Job Development Authority denied all allegations of wrongdoing in their court filing.

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