E.F. Hutton & Co. yesterday denied allegations that the firm unlawfully purchased Schering-Plough Corp. stock on the basis of inside information, calling the charges "false" and "baseless."

Late Friday, Schering, the large consumer products company best known for St. Joseph Aspirin and Maybelline Cosmetics, charged in a suit filed in U.S. District Court in New Jersey that Hutton misused confidential information by purchasing "massive" amounts of Schering stock.

There has been speculation that Hutton has been buying Schering stock on behalf of Dart Group Corp., which reportedly is considering a Schering takeover bid. Neither Dart, which is based in Landover, nor any other Hutton clients were mentioned in Schering's lawsuit. Daniel J. Good, head of Hutton's merger department, said the Schering allegations are designed to force Hutton to reveal whether the firm has been buying Schering stock. But Good said the legal tactics will not succeed.

"It is apparent to us that Schering-Plough's management commenced this action as a result of our refusal to give them confidential and proprietary information regarding our clients and their trading activities," Good said. "Schering-Plough's demands for this information are improper. We will not be intimidated by actual or threatened litigation into disclosures of a confidential nature regarding clients of the firm."

In its lawsuit, Schering said it provided Hutton with confidential information for use by two Hutton clients that were considering transactions with Schering. However, Schering charged, Hutton misappropriated the information by purchasing more than 2.5 million shares of Schering stock on the basis of that inside information.

Securities regulations prohibit any securities firm that obtains confidential corporate information from misappropriating that information by purchasing stock for itself or for its clients.

"The allegations that Hutton received material nonpublic information from Schering and used such information to purchase securities are totally without basis in fact," Hutton's Good said. "The Schering complaint contains numerous misstatements, false allegations and foolish speculation that Schering knows to be baseless."

Sources said that Schering's investment banker, Merrill Lynch, contacted Hutton officials on Saturday in an attempt to determine whether Hutton has been purchasing Schering stock and on whose behalf. Securities laws do not require that Hutton or its clients reveal whether they have been purchasing Schering stock until their holdings reach 5 percent.