MIAMI, OCT. 27 -- Arthur H. Kane, who shot and killed one stockbroker and critically wounded a second before taking his own life at a Merrill Lynch office Monday, was a convicted criminal given a new identity under the federal witness protection program.

Kane had a midlevel job with the Social Security Administration, obtained under the protection program, the U.S. Justice Department in Washington confirmed today.

His real name was Arthur H. Katz. The government had moved him to Miami, and had given him a new name and a job.

Kane, 53, a former Kansas City, Mo., lawyer, was convicted of conspiracy to commit mail fraud in 1978. He cooperated with government investigators in the case, and served six months of a two-year sentence in a minimum-security prison. He surrendered his right to practice law, and was disbarred in Missouri in February 1979.

Shortly afterward, he arrived in Miami and bought a $400,000 house.

"There was a severe threat against his life. He was reluctant to join the {witness} program," Justice Department spokesman John Russell said. "He provided a service to his country, and we felt he was owed this protection.

"We have no knowledge that any of this money was ill-gotten," Russell said.

To coworkers at the Social Security branch office in South Miami, Kane was a $29,000-a-year claims representative who helped retirees fill out benefit forms. He verified information and sent the papers along. His preoccupation was studying The Wall Street Journal at his desk every morning.

To the Merrill Lynch brokers at The Falls shopping center, Kane was their prize client, a savvy market player who had opened an account in 1980 with $500,000 and parlayed it into a $7 million portfolio by this summer.

As the market rose in the 1980s, so did Kane's fortunes. His specialty was speculating in takeover stocks, which are shares of companies targeted for purchase by other firms. Merrill Lynch brokers regarded him as brilliant, and he never asked for advice.

But as much as half of Kane's $7 million account was bought on margin. Half the investment was made with money he borrowed from Merrill Lynch. When the market began to collapse on Oct. 14, so did the value of the stocks he had used as collateral on those loans. Takeover stocks were hit particularly hard.

By Monday, Kane's account had dropped to $600,000, a source familiar with the Kane account said. Monday was due day, one week after the historic market drop of more than 500 points. Kane's margins had been called. Merrill Lynch told him he had to pay.

Instead, Kane went to Merrill Lynch and asked for a meeting with his broker, Lloyd Kolokoff, 39, and the office manager, Jose Argilagos, 51. In Argilagos' office, Kane removed a .357 Magnum from his briefcase and started shooting, according to police reports. Kane then shot and killed himself.

Argilagos died instantly. Kolokoff, who was shot in the left back, was listed in serious condition today and may be paralyzed from the waist down.

Kane bought the revolver only 45 minutes earlier. He was able to walk out of the store immediately with the weapon because of a new gun law passed this year in Florida, Metro-Dade police spokesman Bill Johnson said.

The mystery of how a midlevel government bureaucrat with a GSA salary rating of 10 could amass a fortune in stocks was being unraveled in the aftermath of the killings. Police and Merrill Lynch officials declined to comment.

The brokerage's Falls office opened late today. An off-duty police officer was posted at the door. Reporters and camera crews were barred. Office workers were ordered not to speak to anyone when entering the two-story building in South Dade County.

John Trollinger, a spokesman for the Social Security Administration in Baltimore, said Kane was "one of many employes assisting the elderly and disabled in filing claims."

At Merrill Lynch, Kane would help himself to empty desks in the office, busily reading the day's stock market results, using Quotrons to call up information about accounts.

He drove a two-seat Pontiac Fiero, dressed casually and lived in an ultra-modern house on an exclusive street.

Rabbi Brett Goldstein of Kendall's Temple Shir Ami, a customer at The Falls office of Merrill Lynch, said he noticed that Kane appeared excited last Thursday.

"He told me he was in a difficult leverage situation," Goldstein said today. "There was exasperation, that everything he was doing seemed to be wrong, that his timing was off, that he was digging a hole deeper and deeper."

Kane began visiting the office daily, said Goldstein.

Last week, Kane bumped into Goldstein. "He was running from one Quotron to the next, trying to fill a void until something favorable happened," Goldstein said. "It never happened."