The Securities and Exchange Commission yesterday filed suit against one of the leading members of a select but powerful group of Wall Street operatives who operate hedge funds.

In a suit filed in U.S. District Court in New York, the SEC charged Howard Associates and Marc Howard with manipulating the market price of a number of important stocks.

Howard, who could not be reached for comment late yesterday, did not settle the SEC complaint, which apparently means he is going to challenge the commission in court.

The suit is believed to be the first brought by SEC against a hedge fund, which enjoys a measure of immunity from securities laws that apply to normal brokerages.

Hedge funds are essentially private mutual funds for wealthy investors.

The general partners - in this case, Marc Howard - manage pools of money put up by limited partners, often doctors and celebrities, who usually must put up a minimum of $100,000 just to enter a fund.

The funds are highly active, and brokers claim that the in-and-out trading of a $20 million hedge fund can generate more commissions annually than can a $1 billion pension fund.

The SEC alleged that Marc Howard and Howard Associates caused the market price of a number of stock "to rise and be maintained at artificially high levels."

"While the markets for such securities reflected such manipulative activities, Marc Howard and Howard Associates sold substantial amounts of Howard Associates' long positions in such securities," the SEC said.

According to the SEC complaint, Howard Associates would often accumulate large positions in a specific stock over a period of time. Then, in a flurry during a day or so, Howard Associates allegedly would bid up the price of the stock.

Once the price was up, Howard Associates allegedly would see a block of the stock at the "artificially" high price, the SEC claimed.

The SEC charged Howard Associates with "creating actual and apparent active trading in such securities, and raising the prices of such securities for the purpose of inducing the purchase of such securities by others."

The SEC asked the court for a permanent injunction against such activities by Howard Associates and Marc Howard. It also seeks a return of all allegedly illegal profits.

In one example cited by the SEC, Howard Associates acquired more than 248,000 shares of Columbia Pictures Industries Inc. by about March 5, 1975.

On March 6, Howard Associates acquired another 260,000 shares of Columbia, which amounted to 44 percent of all the transactions in Columbia stock that day on the New York Stock Exchange.

The SEC claims that Howard Associates, through its purchases, forced up the price of Columbia's stock from $5.25 a share in the morning to $5.75 in the late afternoon, at which point it caused a broker to sell 100,000 shares of its Columbia holdings.

Among the other stocks allegedly manipulated by Howard Associates between March 5, 1975 and the present: Cluett, Peabody & Co., DeSoto Inc., Benquet Consolidated Inc., Host International Inc., Lafayette Radio Electronics Corp., Pan American World Airways Inc., and Seaboard World Airlines Inc.

Hedge funds, such as Howard Associates, have long been exempt from regulation by the SEC based on their small size and private partnership status.

But for better than a year, the SEC has been conducting a wide-ranging investigation into the market functions of the hedge funds.

Marc Howard has been the most successful of the hedge fund managers. A 1977 Time Magazine story claimed that Howard Associates had grown 1,000 percent since 1969 and had assets of more than $20 million.