Chase Manhattan Corp., the nation's third-largest bank, has agreed to a settlement with the New York state attorney general's office to no longer share private financial information about its customers with telemarketers and other unaffiliated third parties.

The settlement, reached earlier this week, is being watched throughout the country by industry and consumer groups as evidence that many states are pushing to enact tougher protections on consumers' financial privacy than what is contained in the landmark financial services law adopted by Congress last fall.

The law's privacy provisions, which take effect in May and were unsuccessfully lobbied against by the financial services industry, require banks, brokers and insurers to disclose to customers all sharing of nonpublic information about them with affiliates and nonaffiliates. The law also require companies to give customers the chance to decline having their personal information shared with unaffiliated third parties. But Congress specifically said that states could enact their own, tougher rules.

Under the settlement, Chase will no longer share any nonpublic information with third parties. It will continue to share names, telephone numbers and addresses but will give consumers a chance to block transmission of that information as well.

New York Attorney General Eliot L. Spitzer also submitted proposed state legislation this week that would go a step further than the settlement by requiring companies to get consumers' permission before sharing any type of information with unaffiliated third parties, even publicly available names and addresses.

Chase had been providing private financial information, such as credit-card buying habits, to third parties, who then used the information to try to sell consumers additional products. Chase profited by receiving a commission that Spitzer estimated at 24 percent on any successful sale to a Chase customer.

Chase voluntarily suspended the practice last summer, around the time Spitzer's office contacted the bank to investigate how it shared information. Spitzer contends that Chase's practices violated the bank's stated privacy policy to consumers.

Chase says that it broke no law and that the settlement merely makes permanent its decision last summer to suspend the practice.

"We are not in a fight with the attorney general here; we have been cooperative," said Chase spokesman Jim Finn. "We think what we're doing is the right thing to do for customers. We thought it made sense to take a leadership position on this."