A week before George W. Bush's 1990 sale of stock in Harken Energy Co., the firm's outside lawyers cautioned Bush and other directors against selling shares if they had significant negative information about the company's prospects.

The sale came a few months before Harken reported significant losses, leading to an investigation by the Securities and Exchange Commission.

The June 15, 1990, letter from the Haynes and Boone law firm wasn't sent to the SEC by Bush's attorney Robert W. Jordan until Aug. 22, 1991, according to a letter by Jordan. That was one day after SEC staff members investigating the stock sale concluded there was insufficient evidence to recommend an enforcement action against Bush for insider trading.

The president's sale of his oil company shares has become tied to a broader political debate about business ethics in the wake of the Enron Corp. scandal and other cases of corporate wrongdoing.

The delay in delivering the law firm's report to the SEC -- Harken executives had previously withheld it citing attorney-client privilege -- indicates that regulators did not have a full picture of the Bush transaction when they finished their investigation, said Michael Aguirre, a securities lawyer in San Diego, who obtained the documents in the case last summer after filing a Freedom of Information request.

"There was a failure to deal with the most important piece of evidence," he said.

Dan Bartlett, White House communications director, said the timing of the letter's delivery should not have had an impact on the investigation.

"It has been made very clear that the SEC had the right to reopen the case" after August 1991, he said. "Whether it was a day after, or a week after, if career prosecutors received information that was material and relevant, it's safe to say they would follow up on it."

The Boston Globe, which reported Wednesday on the late delivery of the law firm memo, said four former SEC officials who worked on the case did not recall receiving it. Several of those former officials did not return telephone calls yesterday about the 1991 inquiry.

Bush sold 212,140 shares of Harken on June 22, 1990, for $848,560, using the funds to pay off a bank loan that financed his investment in the Texas Rangers baseball team.

The SEC memo closing the case in August 1991 reported that Bush had been given approval to sell the shares by Harken's general counsel Larry E. Cummings and Harken's chairman Mikel D. Faulkner. Cummings told the investigators that he had also checked with Haynes and Boone attorneys, who said they saw no reason why Bush should not sell. In light of the approvals Bush received, it would be difficult to establish that he acted with fraudulent intent, the SEC memo concluded. The SEC memo does not mention the Haynes and Boone letter.

Bartlett said the attorneys' letter was not specifically addressed to the stock sale that Bush was considering at the time. "It was a very general, broad set of guidelines to board members," he said. Bartlett said President Bush does not recall receiving the lawyers' warning but does specifically recall seeking and receiving approval to sell.

In their letter, the Haynes and Boone attorneys noted they had been asked for advice on whether Harken directors and executives who sold company stock could be accused of securities law violations. At the time, Harken, a small, Dallas-based energy company, was in dire need of funds to avoid bankruptcy and had decided to sell shares in two subsidiaries that would be split off from the parent company in what is called a "rights offering."

The offering had been announced publicly, but the price of shares Harken would sell had not been set. Thus, the potential value of the deal could not be immediately assessed.

The lawyers' memo said that if directors had any unfavorable information about the company's outlook, their sale of Harken shares would be viewed critically if the stock price dropped following the rights offering. "Unless the favorable facts clearly are more important than the unfavorable, the insider should be advised not to sell."

Bush and two other directors attended a June 11, 1990, meeting of Harken's audit committee, where Harken's outside auditor, Arthur Andersen, reviewed the proposed rights offering. An Andersen partner told the Harken directors that the offering might lead to a potentially significant reduction in the market value of the subsidiaries, although the amount could not be determined right away.

The attorneys' letter did not conclude whether directors' information about the rights offering was favorable.

Bush has said that his decision to sell his shares was based on good news -- the January 1990 announcement of Harken's deal to drill for oil in Bahrain, in the Persian Gulf region.

Bush received $4 a share for his stock in June 1990. The price dropped sharply following the October 1990 disclosure of the rights offering price, to a low of $1.25 a share in December 1990, but then recovered.

Harken Energy shares now trade at 20 cents a share -- equivalent to 2 cents a share in 1990, before a reverse stock-split in 2000 in which investors received one new share of Harken for each 10 held previously.