The Securities and Exchange Commission yesterday terminated its long-standing case against Washington-area investment company president Charles W. Steadman, imposing lighter sanctions than originally levied and then waiving them.

The order appeared a partial victory for Steadman, who manages five Washington-area mutual funds and about $75 million in assets and whose organization was managing about $250 million at its peak. Steadman was accused by the SEC in 1971 of violating antifraud, reporting, conflict-of-interest and proxy provisions of federal securities laws.

The 11-year-old case had gone to the Supreme Court where it resulted in a victory for government regulators, allowing them to impose severe penalties for violations of federal laws and regulations subject to most minimal standard of proof allowed in legal proceedings. The high court did not rule on the findings against Steadman or the penalties imposed in his case--just on the standard of proof issue.

In particular, the SEC had charged that Steadman borrowed heavily and solicited brokerage business from banks where his investment company clients had deposited large sums in noninterest-bearing accounts. Not only was there a potential conflict involved, but also Steadman failed to disclose the facts adequately, the SEC said at the time.

In 1979, the agency imposed its toughest penalty on Steadman, permanently barring him from association with any investment adviser, prohibiting him from affiliating with any registered investment company and suspending him for one year from association with any securities dealer.

Steadman appealed, and later the same year the Fifth U.S Circuit Court of Appeals in New Orleans ordered the SEC to reconsider the harshness of the punishment imposed, saying that it had not adequately explained why it chose to be as tough on Steadman as it had.

Steadman has continued to direct the investment funds during the long-running dispute.

Steadman submitted an offer of settlement that the SEC accepted. The agency said that the offer acknowledges, as the SEC said the appeals court had affirmed, that Steadman "in connection with his management of several investment companies, violated and/or willfully aided and abetted violations" of federal securities laws.

The trustees of the Steadman Family of Mutual Funds, in a statement issued in anticipation of the announcement of the settlement, said that shareholders of the Steadman Funds had benefitted from Steadman's negotiations with banks that held custodian funds. But, the trustees added, "the SEC staff thought his otherwise completely lawful collateral transactions with the custodian bank involving unrelated matters should have been set forth in the funds' prospectuses."

"The funds' trustees have supported Mr. Steadman throughout and we believe he has been vindicated in his long and personally costly fight," the statement said. "We are particularly glad that Mr. Steadman will continue to direct the Steadman Family of Funds with renewed vigor and confidence."

The SEC suspended Steadman for 180 days from association with any investment adviser, broker or dealer and essentially barring him for that period from practicing his profession. But the SEC waived and set aside the imposition of sanctions, although it reserved the right to reinstate the sanctions if securities laws are violated again during the 180 days.

The SEC also required Steadman to set up certain procedures as safeguards against future violations, including prompt repayment of advisory fee overruns and disclosure of information about present and anticipated financial relationships between either Steadman or any company controlled by him and any financial institution, which holds assets belonging to an affiliated invesment company.