A federal grand jury in New York has subpoenaed documents from Merrill Lynch & Co., the nation's largest stockbroker, in an investigation to determine whether laws requiring the reporting of large cash transactions have been violated.

While all participants confirm the subpoenas, which were issued in New York on Jan. 31 and Feb. 1 at the request of the Internal Revenue Service, it is not clear whether Merrill Lynch is a target of the criminal investigation.

An article to be published Monday by the National Law Journal alleges that the investigation grew out of an IRS finding that Merrill Lynch has reported far fewer large cash transactions than have the banks that do business with the firm.

A spokesman for Merrill Lynch said the cash transaction records had been subpoenaed, but "there is no indication we are the target of an investigation." He said the firm had been told that "the United States attorney was looking into cash involved in the drug trade."

The National Law Journal will report that government investigators complained that the Treasury Department took an unusually long time to approve the IRS inquiry and that officials of Merrill Lynch appeared to be unsurprised by the subpoenas, which were issued after Treasury reviewed and approved the action.

Before he became secretary of the Treasury, Donald T. Regan was chairman of the board and chief executive officer of Merrill Lynch.

Marlin Fitzwater, a spokesman for the Treasury Department, said Regan was not informed of the inquiry until Feb. 2, after the subpoenas were issued, and Regan immediately removed himself from the case.

In addition, Fitzwater quoted Regan, who was on the West Coast, as saying he had "no contact with Merrill Lynch officials about the case."

Fitzwater said he does not know the details of the investigation and would be prohibited from discussing them if he did. In general, however, he said the inquiry is "in relation to currency transactions and reporting requirements."

Under the law, whenever an individual or company is involved in cash transactions exceeding $10,000 on a single day, the financial institution involved must report the transaction to the IRS on a special form known as a currency transaction report (CTR).

This is a special provision designed to help investigators trace and prosecute crimes involving large sums of money, including income tax evasion, gambling, narcotics, bribery and organized crime activities.

If the amount of money involved in an unreported transaction exceeds $100,000, the maximum penalty for a violation is five years in jail and a $500,000 fine.

According to the National Law Journal, the investigation began when IRS officials examined CTRs submitted by Merrill Lynch and then compared them to the CTRs of the banks that do business with Merrill Lynch.

"During 1981 alone in one area of the city New York , the banks reported that Merrill Lynch accounts had produced 500 CTRs involving a little less than $10 million. Meanwhile, Merrill Lynch itself had reported to the IRS only about 100 CTRs totaling a little more than $1.5 million for the same time period," the National Law Journal said, attributing the information to "sources familiar with the investigation.