It was a courtroom scene that would have delighted "Alice in Wonderland" author Lewis Carroll.

Standing before U.S. District Court Judge Barrington Parker yesterday morning was New York lawyer Arthur Liman, who served as chief counsel of the Senate committee that investigated the Iran-contra affair. Liman, now defending Marc Belzberg and the wealthy Canadian Belzberg family's First City Financial Corp. against Securities and Exchange Commission charges, was complaining about the government's closing arguments in the case when he reached for "Alice in Wonderland."

The SEC, Liman argued, was asking Judge Parker to use evidence of Marc Belzberg's innocence to find him guilty. That evidence, Liman said, was that none of Belzberg's closest associates knew of his alleged wrongdoing in connection with the purchase of Ashland Oil Co. stock in 1986. (The SEC argued this was because Belzberg was concealing the wrongdoing, Liman said, while the real reason was that his client had not violated the law.)

Liman said he would quote from Carroll's book rather than any Supreme Court decision, selecting a courtroom scene in Chapter 12 in which Alice is on the witness stand when the White Rabbit delivers an anonymous letter to the court that he believes contains important evidence.

Arguing that "we are being taken down the same rabbit hole," Liman read the following passage:

"Are they in the prisoner's handwriting?" asked another of the jurymen.

"No, they're not," said the White Rabbit, "and that's the queerest thing about it." (The jury looked puzzled.)

"He must have imitated somebody else's hand," said the King. (The jury all brightened up again.)

"Please, your Majesty," said the Knave, "I didn't write it, and they can't prove I did: there's no name signed at the end."

"If you didn't sign it," said the King, "that only makes the matter worse. You must have meant some mischief, or else you'd have signed your name like an honest man."

There was a general clapping of hands at this: it was the first really clever thing the King had said that day.

"That proves his guilt," said the Queen.

Said Liman, "I feel like uttering the words of Alice: 'It proves nothing of the sort.' "

"After Mr. Liman's rendition of 'Alice in Wonderland,' I ought to become the Mad Hatter," SEC lawyer Barry Goldsmith told Judge Parker. Following the closing arguments, Goldsmith added, " 'Alice in Wonderland' has been rejected as precedent in this jurisdiction. It was entertaining but not germane to the evidence in this case."

The SEC has charged that Marc Belzberg and First City made about $2.7 million in illegal stock trading profits on shares purchased after the Belzbergs allegedly failed to disclose their ownership of more than 5 percent of Ashland stock in March 1986. Disclosure of a 5 percent stake often causes a stock price to rise; by concealing their holdings, the SEC alleges, the Belzbergs were able to buy shares at artificially low prices.

Bear, Stearns Chairman Alan C. (Ace) Greenberg, who purchased the shares in question, has told the SEC he thought he was buying and holding the shares for the Belzbergs. But Liman said that Marc Belzberg never instructed Greenberg to buy the Ashland shares, so they actually belonged to Bear, Stearns. Liman termed the difference of opinion over the shares' ownership an honest misunderstanding.

The SEC doesn't see things that way. "The misunderstanding defense is being used to explain otherwise troublesome facts," Goldsmith said. "They both knew whose stock this really was."

"This is a very interesting case," Judge Parker said, giving no indication when he would rule.