NEW YORK, OCT. 9 -- Federal prosecutors in Rhode Island have recommended that the Justice Department seek an indictment against E.F. Hutton & Co. and at least one of its former brokers for allegedly helping organized-crime figures launder hundreds of thousands of dollars, sources familiar with the case said today.

Attorneys for the New York-based brokerage house met in Washington Thursday with David Margolis, head of the department's Organized Crime Strike Force, to argue against any criminal charges in the case, the sources said.

The case centers on Hutton's Providence office, where at least two brokers are alleged to have helped persons with organized-crime ties convert large bundles of cash to bonds worth $9,999 or less, evading federal disclosure rules for transactions involving at least $10,000, the sources said.

One of the brokers has since died, and the other no longer works for Hutton.

Steven Nelson, a spokesman for Hutton here, said the company disclosed in February, in a filing required by the Securities and Exchange Commission, that a federal grand jury in Providence is investigating whether Hutton's branch office there violated federal reporting requirements on transactions between 1981 and 1984. Nelson said the company would have no further comment.

A money-laundering indictment would present Hutton with major problems while it is trying to overcome the effects of its 1985 conviction in a massive check-kiting scheme.

The company pleaded guilty to 2,000 felony counts of mail and wire fraud, paid a $2 million fine and agreed to make restitution to the banks involved, but the Justice Department was sharply criticized for failing to bring charges against Hutton employes.

In the Providence case, Hutton officials are simultaneously trying to forestall an indictment and persuade the SEC not to take disciplinary action against the firm if criminal charges are brought, the sources said.

Under law, an investment firm convicted of a felony is automatically barred from selling mutual funds unless it wins an exemption from the SEC. The commission granted Hutton such an exemption in the check-kiting case but imposed lesser penalties.

Prosecutors in Providence recommended an indictment in the money-laundering case last summer. And senior officials in the Justice Department's Criminal Division are to decide shortly whether to seek charges, sources said. A five-year statute of limitations is about to expire on some of the transactions.

Jeremiah O'Sullivan, head of the Organized Crime Strike Force in New England, declined to comment on the case, as did a Justice Department spokesman in Washington.

The strike force, which has prosecuted several New England financial institutions for money-laundering, has increasingly focused on currency violations as a way of cracking down on drug dealers, mobsters and others who must find ways to hide large amounts of illegal cash and the institutions that help to facilitate the transactions.

The Hutton case began several years ago, sources said, when the Internal Revenue Service conducted an audit of a Hutton secretary, one of several clerical employes allegedly directed by company brokers to launder cash for customers.

According to knowledgeable sources, investigators were told that customers would bring suitcases full of cash to Hutton brokers, who allegedly directed secretaries to convert the money to tax-exempt bearer bonds, which do not have to be made out to an individual.

According to the sources, the secretaries were sent to numerous banks so no single bond would be purchased for more than $9,999, which would legally require the financial institution to file a report with the Treasury Department.

On one occasion, the sources said, a Hutton secretary, finding herself with more than $10,000, bought a bond and asked the bank to file a currency transaction report in her name, not the company's.

When the IRS audited the secretary and asked how she could afford a $10,000 bond, the sources said, she provided details that triggered the probe.

Investigators were told that the Hutton brokers knowingly handled accounts owned by persons with ties to Raymond (Junior) Patriarca, head of Rhode Island's largest organized-crime ring, sources said. Some of these clients were also involved in the pornography business, the sources said.

Prosecutors have had difficulty building a case against organized-crime figures allegedly involved because the paper trail is highly complicated and routinely involved the use of fictitious names, sources said.

They also said the prosecutors, who have granted immunity to low-level employes, are unlikely to seek charges against senior Hutton executives because of insufficient evidence that they were aware of the alleged scheme.

Hutton has told the Justice Department that the company should not be prosecuted for unauthorized actions of one or two employes, sources said.

In a related probe, U.S. Attorney Lincoln C. Almond in Providence has been investigating the personal finances of Joseph A. Bevilacqua, who resigned last year as chief justice of the Rhode Island Supreme Court during impeachment hearings that focused on his finances and his admitted ties to organized-crime figures.

Some of Bevilacqua's investments were handled by Stephen S. Fusco, a Hutton broker in Providence until his death from cancer in December 1985, according to the impeachment hearings. Fusco is one of the brokers involved in the Hutton probe.

According to testimony at the hearings, Bevilacqua conducted much of his business in cash and had his secretary buy tax-exempt bearer bonds through Fusco. Bevilacqua has been quoted as saying he never met Fusco.

In the check-kiting case, Hutton deliberately overdrew its bank accounts by as much as $270 million a day, permitting interest-free use of money from dozens of banks.

The company's vice chairman and senior vice president resigned after an internal inquiry by former attorney general Griffin Bell criticized them and 13 other Hutton executives for allowing the systematic overdrafting.