A federal court judge has refused to bar the Securities and Exchange Commission from pursuing its seven-year investigation of First Jersey Security Corp., but the fast-growing brokerage firm has taken its case to the U.S. Court of Appeals, which promised to rule later in the month.

First Jersey asked the U.S. District Court in Newark, N.J., three months ago to stop the SEC probe on the grounds that documents vital to its defense had disappeared from a hearing room in the downtown Manhattan Federal Building.

But Judge H. Lee Sarokin ruled yesterday that First Jersey had failed to exhaust all its appeals remedies within the SEC before going to the courts. He did give First Jersey time to appeal his ruling before allowing the SEC to go ahead, however.

This effectively kept the SEC from filing a civil complaint in U.S. District Court in Washington against First Jersey for its dealing in the stock of an oil and gas exploration company called Geosearch. SEC attorneys revealed in Sarokin's Newark courtroom on Dec. 3 that the commission had decided at its meeting that week to file the complaint under the general antifraud provisions of the securities law as soon as the court-ordered ban was lifted. Ordinarily, the commission's action would not be made public until the civil complaint was filed with the court.

Sarokin said his court had no jurisdiction to rule on the disappearance of the files, which First Jersey argued had been left in the custody of SEC officials for safekeeping, because the securities brokerage firm did not go through all the possible administrative remedies.

The judge said First Jersey has a petition pending before the SEC asking it to drop the investigation because the documents it needs for its defense have disappeared from commission offices in the Federal Building. Only when the SEC rules against it can the firm go to the court, the judge said.

The judge also turned down First Jersey's attempt to stop SEC action in the Geosearch case. He said the securities firm will have its day in court when the SEC files its complaint.

Commenting on Sarokin's ruling, First Jersey President Robert E. Brennan said, "I think it's a disgrace that the SEC has been trying to duck facing me on the merits of this issue" of the missing files. "But time is running out. They will not get away with it." He promised to continue his legal fight against the SEC.