Laser Mortgage Management Inc. last week fired Michael L. Smirlock, its chairman, CEO, and president, citing pricing irregularities in securities portfolios he supervised.

The company also said its board of directors will hire a financial adviser to help with "strategic alternatives" to improve stockholder value.

David A. Tepper and William Marshall, two directors of the company, have also resigned for personal reasons, the company said.

Portfolio management decisions for Laser Advisers Inc., the company's securities management unit, will be made by Peter T. Zimmermann and Robert J. Gartner, the Short Hills, N.J., company said. Mr. Smirlock will remain chairman of Laser Advisers.

Mr. Smirlock was "an important cog in the wheel" at Laser Mortgage, a real estate investment trust that manages mortgage assets for others, said Tom Maier, managing director at Everen Securities in Chicago. "If you take him out of the equation, it's not clear what you're left with."

Mr. Smirlock had resigned as CEO of Laser Advisers in June, after hedge fund investors learned that second-quarter returns on some assets were not in line with what Laser claimed, Mr. Maier said. The irregularities had to do with how the company was pricing options on swaps, he said.

The three hedge funds had exposure to the so-called "swaptions," but the REIT, Laser Mortgagement Management, did not, Mr. Maier said. The company's auditors are reviewing the pricing now and will report the results to shareholders by mid-August, he said.

Before coming to Laser, Mr. Smirlock had been a principal of Appaloosa Management since 1994. The mortgage funds he ran for Appalossa produced average annual returns of 15%, according to a corporate profile prepared by Bear Stearns. He left Appaloosa for Laser when the REIT had its IPO in November 1997.

Returns on mortgage-backed securities are down this year because of falling interest rates that prompt borrowers to refinance and repay loans. But these losses do not match the 30% declines in net asset value that sources said investors in Laser's hedge funds may have experienced.

Mispricing of the portfolio in April led to losses for three hedge funds, including the Shetland Fund Ltd., the Mustang Investment limited partnership, and Trakehner LP, all of which traded through a single hub fund, one source said.

George Van, chairman of Van Hedge Fund Advisors International Inc., Nashville-an investment adviser that matches investors to hedge funds-said that June was the first losing month this year for mortgage-backed- securities hedge funds.

The first three quarters of 1996 represented the apex of the market, with 35.2% net returns for mortgage-backed-securities hedge funds, Mr. Van said. But since then, returns have slipped considerably, with 18.1% returns in 1997 and estimated 1.32% returns for 1998 through the second quarter, he said.

The declines are leading some investors to withdraw their funds. "When returns are like this you do see redemptions," Mr. Van said.

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