The U.S. Supreme Court, dealing a blow to the securities industry, yesterday refused to change the rules that allow commercial banks to sell short-term, large-denomination corporate IOUs, or commercial paper.

At the same time, the court also placed a time limit on the use of federal racketeering statutes in private lawsuits, and ruled that creditors in a bankruptcy case may not sell off products of the bankrupt company until the workers have been paid their wages.

In the case involving sale of commercial paper, the Supreme Court, without comment, left intact rulings that banks are not treading illegally in the securities industry by dealing in the IOUs.

The dispute began in 1979 when the Securities Industry Association, a trade group of underwriters, brokers and securities dealers, challenged a decision by Bankers Trust Co. of New York to enter the commercial paper field.

The Federal Reserve Board had approved the activities of Bankers Trust, ruling that commercial paper is not a "security" under federal banking law.

The Fed was overruled by the Supreme Court in 1984, but the court didn't foreclose banks from dealing in commercial paper. Instead, the justices sent the case back to the U.S. Circuit Court of Appeals in Washington for further study.

Last December, the appeals court ruled that the banks may deal in commercial paper, even though the IOUs can be considered securities.

The court rejected arguments by the securities industry that allowing banks to deal in commercial paper could undermine the financial stability Congress sought to achieve by a Great Depression-era law limiting bank activities. It noted that Bankers Trust neither purchases commercial paper itself nor loans money, or underwrites the sale of commercial paper.

SIA President Edward I. O'Brien said he was "disappointed the U.S Supreme Court has decided not to hear our arguments."

But he added, "Even if the Supreme Court had agreed to hear the case and rule in the securities industry favor, it still would only have served as a stop-gap measure since the entire question of whether banks should be allowed to enter the price-volatile securities industry is before the Congress, which has the authority to make any changes it deems necessary in the federal law."

In the racketeering case, the justices held unanimously that lawsuits seeking to invoke the federal Racketeer Influenced and Corrupt Organizations, or RICO, Act, must be filed within four years of the alleged violation.

Although the 1970 law was aimed chiefly at "eradication of organized crime in the United States," it is not unusual these days to find at least one RICO "racketeering" claim in lawsuits involving almost any business dispute.

The Supreme Court itself cleared the way for continued broad use of the law in 1985 when it upheld the right to invoke RICO in private lawsuits.

The RICO law does not provide its own deadline for filing lawsuits.

Yesterday's ruling on the appropriate statute of limitations in such lawsuits stemmed from an insurance-sales dispute from Pennsylvania.

Writing for the court, Justice Sandra Day O'Connor said RICO's provision allowing civil lawsuits "was patterned after the Clayton Act, a major antitrust law."

The Clayton Act, which carries a four-year statute of limitations, says "any person . . . injured in his business or property by reason of anything forbidden in the antitrust laws may sue . . . in any district court of the United States."

O'Connor said: "We concluded that there is a need for a uniform statute of limitations for civil RICO, that the Clayton Act clearly provides a far closer analogy than any available state statute and that the federal policies that lie behind RICO and the practicalities of RICO litigation make the selection of the four-year statute of limitations . . . the most appropriate limitations period for RICO actions."

In the case of employes' back wages, the court, by a 7-to-2 vote, ruled that a provision in a 1938 law, the Fair Labor Standards Act, applies to secured creditors who take over all assets of failed businesses.

The law's provision bars "any person" from placing into interstate commerce goods produced in violation of the law's minimum wage or overtime provisions.

Lawyers for Citicorp Industrial Credit Co., a secured creditor of a Tennessee business gone bust, had argued that the 1938 law applies only to those who actually violated the wage provisions -- and not to creditors who later take control of a guilty party's assets.