PHILADELPHIA (AP) _ Commerce Bank, which has been criticized for skirting a law barring banks from contributing cash to elected officials who oversee municipal bond deals, is being investigated by federal regulators, the Pennsylvania treasurer's office said Wednesday.

Since 1999, a political action committee controlled by Commerce has contributed hundreds of thousands of dollars to election funds for officials in Pennsylvania and New Jersey.

At the same time, the company's investment arm, Commerce Capital Markets, has earned millions of dollars underwriting municipal bonds approved by those same officials, drawing fire from some who say the donations convey an appearance of a bank seeking to buy business.

Commerce founder and CEO Vernon W. Hill II halted donations by the committee, Compac NJ, in April, saying that while he believed it had not broken any laws, he was sensitive that it was deemed by some to have gone beyond ``current accepted practice.''

Pennsylvania Treasurer Barbara Hafer confirmed through a spokesman that the SEC has opened an investigation related to Commerce, but declined to discuss the inquiry. The probe was first reported Wednesday in the Philadelphia Daily News.

A person close to Hafer, speaking on the condition of anonymity, said the treasurer had been visited within the past month by SEC investigators seeking information about bond sales that had involved Commerce and about company contributions to her campaign fund.

The head of the SEC's Philadelphia office, Arthur Gabinet, declined to say Wednesday whether the agency is investigating. Commerce spokesman David Flaherty said he was unaware of any investigation that involved the bank's political activities and declined further comment.

Headquartered in Cherry Hill, N.J., Commerce Bancorp Inc. has assets of more than $21 billion and more than 250 branches in New Jersey, Pennsylvania, Delaware and New York.

Compac NJ made at least three large donations to Hafer. The first check, for $25,000, was written in March 2000 and later returned by the treasurer. The second check, for $20,000, was written in October of that year. Hafer's campaign finance reports, filed with the state, had no record of that second donation being returned. The committee also donated $5,000 to Hafer's campaign in 2001, according to the records.

Hafer spokesman Robert Gentzel said the treasurer has limited input over which firms are picked in state bond deals and is not influenced by political contributions.

Municipal bond transactions have come under scrutiny in Philadelphia in recent weeks following the discovery of an FBI bug in the offices of Mayor John Street.

Federal agents have subpoenaed records related to bond sales from several sources, and have specifically sought information on deals involving one of Street's political allies, Philadelphia attorney Ronald A. White.

White was a member of a regional board of directors at Commerce Bank, but resigned after the bugging was discovered and his office was raided by the FBI.

Street and White have both denied any wrongdoing. It was not clear whether the SEC's inquiry was related to the FBI's probe, which the bureau has refused to discuss.

The Municipal Securities Rulemaking Board forbids bond dealers from contributing more than $250 to municipal officials with which it expects to do business in the next two years.

In Pennsylvania, Compac NJ has given at least $25,000 to state Auditor Robert Casey, $25,000 to Gov. Ed Rendell, $13,500 to former Gov. Tom Ridge and $25,000 to Street. It has also contributed tens of thousands of dollars to other political committees that donate to politicians of both parties.