New Mexico Gov. Bill Richardson withdrew his name Sunday from consideration to be commerce secretary, citing a federal investigation into a company that has donated to his political organizations -- the first serious snag in Barack Obama's transition efforts.

Mr. Richardson, a former presidential candidate and one of three Hispanics nominated to Mr. Obama's cabinet, said he stepped aside "with great sorrow." In a statement, he said a "pending investigation of a company that has done business with New Mexico state government promises to extend for several weeks, or, perhaps, even months."

The governor has said he is not guilty of any wrongdoing. But a source close to him said there was too much uncertainty about the investigation to go before potentially hostile Republican senators in upcoming confirmation hearings.

A federal grand jury is investigating how CDR Financial Products of Beverly Hills, Calif., won more than $1.5 million in work advising the state of New Mexico and its state bond operations after making contributions to two of Mr. Richardson's political action committees. The "pay to play" investigation seeks to determine whether the governor's office had any role in the contracting decisions.

The focus of the probe is on fees paid to CDR by the New Mexico Finance Authority in 2004 -- soon after the firm donated $100,000 to Mr. Richardson's political-action committees. Much of that money went to his efforts to register minorities to vote, but some may also have covered expenses for the governor and his staff at the Democratic National Convention in Boston that summer, according to New Mexico and federal election financial-disclosure statements.