NEW YORK (AP) _ A former Securities and Exchange Commission lawyer was one of six people arrested in a scheme to sell millions of shares of discounted stock by paying for bullish broadcast reports.

James Nearen, 43, an SEC lawyer for seven years, is accused of tipping off five defendants to an investigation into their fraud scheme, then helping them cover it up, The New York Times reported today.

The arrests arose out of an investigation into the broadcasts of CNBC financial commentator Dan Dorfman, who the Times said broadcast a positive report on one of the two companies accused in the scheme.

Dorfman is not charged or named in the indictment. He did not return phone calls made to CNBC.

Prosecutors said five men used special SEC rules to quietly issue stock in two companies _ Comprehensive Environmental Systems, Inc., of West Babylon, and Alter Sales Co., Inc., of Lighthouse Point, Fla.

The stock was issued in the names of fictitious people, real people unaware that the stock was being issued in their names or people involved in the scheme. Some was issued for as little as a dime a share.

in March 1995, defendants Grant Curtis, Leo Mangan, and Tim Masley arranged for Alter to issue 20,000 shares of stock to an unnamed individual to get Alter to be the subject of a favorable television report, according to the indictment unsealed in federal court in Brooklyn on Friday .

It does not say to whom the payment was made, not does it name the program or a journalist.

The indictment also says that Masley and Pedro Gomez, 37, of Connecticut, paid an unnamed individual $60,000 in October 1994 for a good report on Comprehensive, then known as Integrated Resources Technologies.

Dorfman broadcast a positive report on Alter in April 1995, and in November 1994 quoted Mangan as saying Japanese investors were buying stock in his company, which was misidentified as International Resource Technology.

The indictment also charges Curtis and Mangan _ who have previous convictions for bank fraud and drug trafficking _ of issuing death threats to people suspected of reported the scam to SEC authorities.