Ronald J. Morrow shot himself last February just before police could arrest him on grand theft and fraud charges. Hours later, as clients banged on the doors, his firm, Coordinated Financial Planning, declared bankruptcy, leaving some 250 investors out $7 million.

His death brought to a tragic end a scheme in which Morrow, 36, had bilked some clients out of their life savings by setting them up in phony real estate partnerships, equipment leasing deals and money market funds, according to county investigators. It was a classic "Ponzi" scheme: Morrow used the investments of new customers to pay the high yields he had promised earlier customers, the investigators said.

The Morrow story is one of several financial planning scandals that have rocked this state in the past year. J. David Dominelli of San Diego pleaded guilty last month to mail fraud, bankruptcy fraud and income tax evasion in a case involving charges that he cheated investors of more than $60 million through the sale of fictitious currency futures. A gold arbitrage firm in Sacramento promised returns of 8 percent a month before its officers were convicted of swindling. And about the time of Morrow's death, a financial planner in Ft. Bragg, north of Mendecino, admitted cheating clients out of $1.5 million.

Morrow was a member of a rapidly growing fraternity of financial planners -- consultants who offer comprehensive plans for clients covering investments, insurance, taxes, retirement and other financial matters. While there are many legitimate planners in the field, anyone can hang out a shingle as a financial planner without being licensed or passing an examination. This has opened the door to abuses ranging from incompetence to fraud.

Last month, a survey conducted in 20 states by the National Association of State Securities Administrators implicated financial planners in $20 million in frauds last year, and the regulators said it is "just the tip of the iceberg."

California is generally judged to be one of the worst states for abuses because of its ready wealth and reputation as a hothouse for inventive kinds of new investments. The scandals led to public hearings last fall and proposed state legislation to control abuses.

Consequently, California may become the first state in the country to try to police this burgeoning, yet unregulated, industry. As such, it is being watched closely by financial planners and by regulators in other states.

The proposed legislation would require anyone getting paid for financial advice to be licensed, to make a full disclosure to clients, including any conflict of interest resulting from commissions earned on recommended products, and, at the discretion of the state commissioner of corporations, to pass state or federal examinations. Hearings will be held on the measure on Monday.

Would such legislation have stopped someone like Morrow?

Working out of a plush office in the California capital, Morrow duped clients into thinking they had purchased government securities, second deeds of trust and other investments, according to investigators with the Sacramento County District Attorneys Office. In reality, few of the investments ever were made, victims and investigators say. As new clients were attracted by the promise of annual returns of up to 22 percent on their money, older clients were paid off with their funds. Otherwise, the money was going into Morrow's pockets.

In the end, a routine audit of one of Morrow's clients led investigators to inspect the records of Morrow's firm, where they found evidence of hundreds of thousands of dollars in unreported income. A warrant charging 49 felony counts was issued for the arrest of Morrow, who had left Sacramento with $70,000 and a passport, investigators said. The end came in the sauna of his opulent vacation home in Lake Tahoe as police arrived at the door.

One of Morrow's victims, who asked not to be identified because she would be embarrassed to admit to relatives in the Washington area that she was taken, invested $32,000 in second deeds of trust yielding 20 percent annually without knowing they were not registered and therefore invalid. (The deeds were on property owned by Morrow, who mortgaged it for other clients as well, she said). Nevertheless, she and her husband received monthly checks for four years until the company went bankrupt.

She said Morrow falsely represented himself as a lawyer and as a Certified Financial Planner, a title conferred by universities and the College for Financial Planning. Morrow had enrolled in the college but did not graduate, college officials said.

He had been a member of the industry's major organization, the International Association for Financial Planning, since 1979, although he had not renewed his membership last December.

According to the victim, two other investors -- a journalist and a law enforcement officer -- looked into his background but found nothing amiss. No complaints had been lodged against him with the state government, officials said. In fact, Morrow had been arrested in 1975 in Sacramento when he was on probation from an insurance fraud conviction in Missouri.

But this information was not readily available to his clients.

As a financial planner, Morrow was not required to register with the state. Had he done so, he would have had to disclose the conviction. According to a survey conducted by the California Corporations Commission, 82 percent of those persons billing themselves as financial planners are registered as investment advisers.

The issue in the California legislature is whether to authorize the state to register all financial planners under the same law governing investment advisers.

The IAFP has proposed a self-regulatory organization, much like that set up by brokers in over-the-counter securities, plus an examination for admission to its registry, or select list of planners. At a recent meeting ago in Washington, state securities regulators formed a joint committee with the Securities and Exchange Commission to work on a uniform law and to encourage those states that do not now have an investment adviser law to enact one. The idea is to extend regulation within existing laws through interpretation and rules rather than to rely on politicians to pass new laws.

But Sen. Joseph B. Montoya (D-San Gabriel Valley) is pushing ahead with a bill that he maintains would create maximum consumer protection and the most efficient regulatory process for this state. His measure would greatly increase the number of people to be regulated, from bankers to attorneys to real estate salesmen to accountants. In short, anyone getting paid to offer any kind of financial advice would be subject to rules governing primarily securities advisers. The state commissioner of corporations would administer the law.

This blanket approach has generated opposition from different segments of the financial industry, most notably from commercial banks. However, Montoya's aides say that technical amendments exempting those persons who confine themselves to a single function -- insurance sales, for example -- ought to improve prospects for the legislation. One savvy political pro gave the bill a good chance at passage this year. "With all of the scandals that have occurred, that's the time to get the legislation through," he said.

Even so, supporters admit that the bill is designed to educate customers and serve as a deterrent. Nothing can stop fraud entirely.