Exchange Commission (SEC) that they illegally traded shares of Bermuda's Mid Ocean Ltd., the reinsurance giant purchased in August 1998 by XL Capital.

The two men have repaid the profits of $173,001 they made from insider knowledge of XL's intention to purchase Mid Ocean, together with civil penalties of a like amount, for a total punishment of more than $340,000.

XL spokesman Roger Scotton said yesterday: "It is XL Capital policy not to comment on ongoing investigations or complaints by the Securities & Exchange Commission.

SEC probes charges of insider trading "We are prepared at all times to assist the SEC in their enquiries.'' The Commercial Appeal , a Memphis newspaper, reported on Thursday that two brokers in brokerage firm Morgan Keegan & Co.'s Nashville office are on administrative leave, pending the outcome of the SEC civil complaint against them in the insider trading case.

Charles R. Roberts and Cristan K. Blackman, both of Hendersonville, Tennessee, will be on leave and not involved with clients until the case is resolved, said Kathy Ridley, a Morgan Keegan spokesman.

Lawyers for both men have filed motions to have the case dismissed, they said last week.

On November 16, the SEC filed a complaint in the US District Court in Nashville against the two and four others., The SEC alleged they engaged in insider trading of Mid Ocean Ltd. securities before the March 16, 1998, announcement that Mid Ocean would be acquired by Exel Ltd. of Bermuda (which later changed its name to XL Capital).

The complaint charged that Blackman had inside information on Mid Ocean from another man charged in the case and passed it on to Roberts. The SEC complaint charged that on March 13, 1998, Blackman bought 3,000 shares of Mid Ocean and Roberts bought 1,000 shares.

Blackman tipped off his brother and three clients, and Roberts told 12 clients, suggesting to some or all of them that they make the purchases through other brokerage firms, as he did, to disguise the connection to Morgan Keegan, the complaint said.

All of the people Blackman and Roberts tipped bought Mid Ocean stock or options on or before March 13, 1998, and sold them for a profit on or after March 16, 1998, according to the SEC.

Morgan Keegan was not a part of the alleged trading, Ridley said. The firm does not follow either Mid Ocean or Exel, and nor does it have an investment banking relationship with either venture, she said.

Ames Davis, a Nashville lawyer with Waller, Lansden, Dortch & Davis representing Blackman, said he has asked the court to throw out the case.

"The SEC has been investigating this since last September and has not been able to provide any concrete evidence or statements that would support a claim of insider trading,'' said Roberts's lawyer, Bob Tuke, a partner in the law firm of Tuke, Sweeney and Yopp in Nashville. Roberts has not been involved in wrongdoing, he said.

The SEC had until yesterday to answer the dismissal motions, Tuke said.

Then the court will decide whether to throw the case out or set a hearing on the matter, he said.

The four other men charged in the case, three from Hendersonville and one from Goodlettsville, Tennessee, signed consent agreements permanently stopping them from violating insider trading laws and rules.

Three of the men repaid a total of $88,303 in profits and paid civil fines equal to their profits.

The fourth man paid a civil penalty of $84,678 representing the profit earned by two of the others, the SEC said.

"Insider knowledge is often difficult to trace,'' said a local corporate attorney who requested anonymity.

"The assumption, on hearing that a company's shares have been the subject of insider trading, that one of the company's officers or employees, is involved is erroneous,'' he said.