NEW YORK, DEC. 26 -- A bankruptcy judge has barred the New York Stock Exchange from seeking a record $50 million fine from Drexel Burnham Lambert Group Inc., saying the firm had been punished adequately for securities law violations.

The ruling by U.S. Bankruptcy Judge Francis Conrad means the stock exchange can't proceed with disciplinary action against Drexel following the investment firm's 1989 guilty plea to six felony counts related to illegal trading.

The NYSE had planned to seek $25 million each from the parent company and the securities subsidiary, Drexel Burnham Lambert Inc. It was negotiating with Drexel when the parent filed for Chapter 11 bankruptcy protection in February.

Under federal law, the exchange needed court approval to proceed with the disciplinary action. The NYSE said in a statement that it is "reviewing the decision to determine whether an appeal is appropriate."

In the ruling, dated Dec. 14, Conrad deflated the exchange's argument that a fine was needed to send a message to Wall Street that wrongdoing would be dealt with harshly.

He said the NYSE's "public policy reasons" for seeking the penalty "don't appear to accomplish much more" than Drexel's settlement with the U.S. Attorney's Office and the Securities and Exchange Commission.

Drexel in September 1989 settled civil and criminal charges by agreeing to plead guilty to the felony counts and pay $650 million in fines and restitution.

Conrad agreed with Drexel in ruling that the NYSE's attempts to extract $50 million from the firm would result in "the misallocation of scarce resources" that could be used to pay creditors.

Conrad also said that the procedure would distract Drexel from drawing up a reorganization plan and that "Drexel's professional attention must remain focused on this critical stage."