Undated (AP) _ The business editor and a reporter at a prominent Southern newspaper were ousted in a conflict-of-interest dispute that raises questions about what personal financial activity is appropriate for journalists.

Business editor Leonard M. Apcar resigned from the St. Petersburg (Fla.) Times last week, days after firing banking reporter James Greiff.

The episode at the 350,000-circulation daily began late last month when Greiff disclosed he had been short-selling stock of Wells Fargo & Co., a San Francisco-based bank.

After consulting with top editors, Apcar dismissed Greiff on Oct. 3. Two days later, Apcar quit under pressure after the editors learned his individual retirement account was invested in a mutual fund containing Banc One Corp. of Columbus, Ohio.

Business journalism ethics have received increased scrutiny since the 1985 insider trading conviction of Wall Street Journal reporter R. Foster Winans, who passed along unpublished tips about his widely read stock market column.

Several editors and journalism professors contacted about the St. Petersburg incident drew a simple ethical rule for all media: Reporters shouldn't own stock or actively trade securities in industries they are assigned to cover.

But they also said mutual funds and other passive investments generally aren't as problematic as profit-oriented trading in the realm of potential conflicts.

''It's part of a journalist's obligation to stay away from short-term trading of stocks they cover,'' said George Harmon, an associate professor at Northwestern University's Medill School of Journalism.

''With a mutual fund you're not controlling what stocks that fund owns,'' said Harmon, a former business editor of the Chicago Daily News. ''It doesn't seem to me that compromises your integrity. You don't have any control.''

Times Managing Editor Mike Foley said the dismissals involved ''a real disagreement'' over the newspaper's conduct guidelines, which warn against potential conflicts but don't prohibit any investments specifically.

''In neither of these cases did I feel that anything improper got into the news columns,'' he said.

In short-selling, an investor sells borrowed stock on the expectation the price of the issue will decline. The investor profits if the price drops and the shares, usually borrowed from a broker, can be replaced at a lower price.

The risky strategy, forbidden to journalists by at least one major business publication, amounts to a bet that a company's stock price will drop.

Theoretically, a reporter writing a negative article about a company could ''short'' the stock of that company, expecting the story to drive down the price. Greiff said he had not written about Wells Fargo. He was accused only of bad judgment, not any wrongdoing.

Following Greiff's dismissal, Apcar said he told his immediate supervisor that he had bank stock in an IRA, but he didn't name the bank.

Greiff, meanwhile, said he told Times executives that Apcar held shares of Banc One, which was mentioned in a story by Greiff the previous week as a possible suitor for a Florida bank. Apcar had edited that story and decided his mutual-fund holding presented no conflict.

On Oct. 4, after rumors that Apcar owned stock in the bank filtered through the newsroom, Apcar said he voluntarily told his supervisor that Banc One was in the IRA. But a day later, Foley asked Apcar to resign.

Mutual funds typically contain baskets of different stocks and other securities. Their contents usually are decided by fund managers, not investors. In an IRA, investors cannot withdraw money without penalty until retirement.

''You're not in a mutual fund ... for a short period of time.'' said Apcar, 37, hired by the Times in early 1989 after more than 12 years as a Wall Street Journal reporter. ''You're in for the long haul unless you trade, and I don't trade.''

The Times' conflict-of-interest policy does not specifically bar any investments but cautions reporters to avoid even the appearance of a conflict and to raise questions with superiors.

Greiff, 35, a Times reporter for more than five years, said he did not violate any policy, written or spoken. He said business writers were told only not to invest in companies they cover or ones based in Florida.

''Within 10 minutes after placing my order with my broker I told several people in my department and told Len,'' he said. ''I said, 'Do you have any problem with it?' and he said no.'' Apcar said he did not respond immediately to Greiff's comments.

''It went from being no problem to being a problem to being a firing offense in a matter of a few days,'' Greiff said.

Rules governing reporters' investments vary widely. Dow Jones & Co., which owns The Wall Street Journal, has what is considered to be the strictest conflict-of-interest policy in the nation.

Reporters and other staffers are barred from short-term trading and must hold securities at least six months. They cannot trade futures or options or sell short. Reporters and their families are prohibited from investing in companies related to their coverage areas.

The Society of American Business Editors & Writers' ethics code urges avoiding even the appearance of conflict. It calls for skirting ''active trading and other short-term profit-seeking opportunities.''

Some editors said newspapers may be at fault if they discipline reporters without precise guidelines.

''If there is no specific policy that makes that clear I think the newspaper has overreached,'' said Sandra Duerr, business editor of The Courier-Journal in Louisville, Ky.

Others said reporters need to be held to the same ethical standard they apply to their subjects.

''If the press as a whole is going to say that politicians should avoid even the appearance of conflict of interest, then we should hold ourselves to that extremely high standard,'' said Karen Rothmyer, an associate professor at Columbia University's journalism school.