Several D.C. City Council members said yesterday that the council may subpoena witnesses and documents to determine if the Barry administration misled the council about its dealings with a New Jersey-based securities firm that went bankrupt last month.

The council has issued subpoenas only twice in its history, according to Gregory Mize, general counsel to the City Council.

Also, council member Betty Ann Kane (D-At Large) said that Mayor Marion Barry should consider firing Deputy Mayor Alphonse G. Hill and other high-ranking officials who decided to invest with Bevill, Bresler & Schulman Inc. and then tried to hide the fact they they hadn't done an adequate job of assessing the firm's financial standing in advance.

"We were lucky that we didn't lose any money, but it clearly was not a prudent decision and clearly not made in a proper way," Kane said. "I think some heads should roll."

The move to step up a council investigation of the city's dealings with BB&S Inc. was triggered by a Washington Post report Wednesday that city financial officers backdated a memorandum submitted to a council committee last week to justify their decision to begin investing with the firm late last year.

The memorandum was stamped with a Dec. 7, 1984 date, four days before the city added BB&S Inc. to its list of preferred investment firms. The Post reported that the document was drafted by Fred Williams, the assistant D.C. treasurer, on April 11, 1985 -- four months after the city began investing with BB&S and four days after reports that the firm had gone bankrupt.

In a letter to City Council member John A. Wilson (D-Ward 2), chairman of the Finance and Revenue Committee, Barry said yesterday that he will "not condone nor tolerate the intentional transmittal of incorrect or fraudulent information by any member of my administration under any circumstance," but that he concluded Williams had not attempted to deceive the council.

The mayor said that Williams had prepared notes on BB&S Inc.'s finances early last December that were used by officials in reaching the decision to invest with the firm, but didn't get around to transcribing them until after the firm went bankrupt.

"In retrospect, I believe that it was an oversight that Mr. Williams did not attend to this transcription in a more timely fashion," Barry wrote Wilson. "He also admits that once the BBS matter became an issue of public concern he went back to formalize the record and make certain that his actions were properly documented. This should have been clearly explained to you on the record during the course of your hearing on Monday.

"It is also clear that the transcription forwarded to you should not have been dated Dec. 7, 1984 but instead April 11, 1985 with a heading clearly indicating that the document reflected the earlier notes," Barry said. "The intent, however, involved no deceit . . . . "

Wilson and Council Chairman David A. Clarke confirmed yesterday they are discussing the possibility of issuing subpoenas that would force administration officials to provide sworn testimony about their dealings with BB&S.

"The issue has moved from one of misjudgment in investing in BB&S to deception in presenting information to the council," Clarke said.

The city invested about $100 million with BB&S Inc. during a four-month period before the firm and four related entities went bankrupt last month and became a target of a federal fraud investigation.

The city had $10 million invested with the company at the time of its collapse, but avoided losing its money by seizing and selling collateral that the firm had posted.

Hill, Williams and Alvin C. Frost, a senior cash management analyst who wrote an internal memo opposing the city's decision to begin investing with BB&S Inc. last December, gave unsworn testimony Monday before a joint hearing of the Finance and Revenue Committee and the Committee of the Whole.

Wilson said he was angered by the submission of the backdated memo and suspects that city officials have not provided the council with a full account of their decision to invest with BB&S. Clarke said the backdated document "appears to be a far more serious matter" than the original decision to go with BB&S.

Kane said that if the council doesn't issue subpoenas, some officials will be reluctant to step forward to testify, for fear of incurring the wrath of their superiors.

In his letter, Barry defended Williams' decision not to pass along Frost's memo of concern to Hill and Anthony Calhoun, the D.C. controller. The mayor said that Frost, who is responsible on a day-to-day basis for investing city cash, should not have a say in designating the firms with which to invest.

He praised Calhoun and Williams as highly competent and said each had available all of the data and information upon which Frost based his Dec. 14 memorandum.

"I do not believe that any of their decisions on BBS would have been changed even if the Frost memo had been provided," Barry said.