Attorney General Edwin Meese III's money manager assigned stock-trading profits to Meese's accounts in a way that suggests Meese may have received financial favors or gifts without reporting them, Sen. Carl Levin (D-Mich.) said yesterday.

Levin, chairman of a Senate subcommittee that has been investigating the transactions, made the statement in asking the Office of Government Ethics to determine whether Meese violated federal disclosure regulations as a result of his now-defunct partnership with San Francisco investment advisor W. Franklyn Chinn.

Releasing a staff study on trading done in the name of the Meese Partners, Levin also asked the ethics office to decide whether Meese, in entering the partnership with Chinn in 1985, violated an executive order prohibiting federal officials from creating the appearance of a conflict of interest.

The staff report, Levin added, raises questions about whether Chinn's "method of investment management, which permitted him to favor one account over another, violated any laws or regulations governing securities trading." He cited Securities and Exchange Commission and Federal Reserve Board regulations prohibiting brokers from exceeding account balances for certain stock purchases and federal law governing the conduct of investment advisors.

"This is very old business," said Justice Department spokesman Terry Eastland. He said independent counsel James C. McKay was already investigating the matter. "This town is famous for piling on," Eastland told reporters. "This strikes me as such an instance."

"It sounds like a total rehash of information that's been published before," said Chinn's lawyer, Penelope Cooper. "Frank did as well for other clients as he did for Meese."

Meese and his wife, Ursula, entered the "limited blind partnership" with Chinn in May 1985 on the recommendation of Meese's friend, E. Bob Wallach, who already had an account with Chinn. At the time, Chinn, again on Wallach's recommendation, had signed up as a consultant for the Wedtech Corp., the South Bronx defense contractor whose attempt to win a Pentagon contract was helped by Meese at Wallach's urging in 1981-82.

"It now turns out that, because of the process followed by Mr. Chinn in managing the Meese Partners account, Mr. Chinn wasn't investing Mr. Meese's money, so much as he was assigning profits and losses to the accounts of Mr. Meese and his other clients at his own discretion," Levin told the ethics office. "His assignment of stock transactions retroactively to those accounts appears to have no relationship to the amount of money in those accounts."

The staff study said that Chinn on seven occasions allocated stock trades to Meese Partners in amounts exceeding the account balance by sums ranging from $5,877 to $142,853. The seven totaled $290,779.

Meese has said he didn't know how Chinn was managing his account, but Levin said this does not relieve the ethics office of the responsibility to determine if "gifts" were actually made to him, "now that we know how Chinn managed the account." The Meeses realized nearly an 80 percent return on an initial $50,000 investment in less than 18 months, the study noted.

Meese said at a hearing before Levin's subcommittee last July that the partnership he created with Chinn was a "conservative" investment, but according to the staff report, the partnership agreement explicitly authorized "trading techniques generally considered aggressive" such as temporary investment of the entire portfolio in a single industry or security and a frequency of turnover "far beyond what might be considered normal."

All of the trades assigned by Chinn to Meese Partners accounts were the purchase and sale of new stock issues on the day the new issues became available, the report said.

The staff said it had been told that without using the holdings of other accounts he controlled -- such as his own Financial Management International Inc. and one in the name of Marymount College of Palos Verdes, Calif. -- Chinn "may not have been able to conduct the number of trades he did . . . on behalf of Meese Partners."

The report said Chinn used a general account at the Imperial Trust Co. to buy and sell stock with his clients' funds, a procedure that allowed him to allocate a stock to his clients' accounts "even days after he had purchased and sold" the stock.