NASD Plans Expansion of Its Hot Line : Securities: By midyear, investors calling the toll-free service will be able to find out more details on stockbrokers’ disciplinary records.

The National Assn. of Securities Dealers made plans this week to give investors access to much broader information about the disciplinary records of stockbrokers.

The NASD by midyear will give callers to its toll-free hot line information about criminal indictments, arbitration decisions, court judgments in civil lawsuits and pending disciplinary action by the NASD, Securities and Exchange Commission, New York Stock Exchange or other stock exchanges.

James P. O’Donnell, NASD executive vice president for member services, said the broader service is a response to a Times series published in July.

The series, about brokers who repeatedly cheat customers, reported that the NASD’s hot line routinely misled callers by giving a clean bill of health to brokers with long records of complaints and legal actions.

O’Donnell confirmed that the NASD also was under pressure to act from the House subcommittee on telecommunications and finance. Responding to The Times’ series, the panel commissioned a General Accounting Office study--due out in about two weeks--which sources said is highly critical of the NASD’s operation of the hot line.

The NASD was required to set up the hot line by the Penny Stock Reform Act, enacted in 1990. It logged 34,510 calls in 1992. The hot line number is (800)-289-9999.

Up to now, however, the NASD’s board has so narrowly defined what constituted disciplinary action that the hot line has given out information only about criminal convictions and on disciplinary actions in which all appeals had been exhausted.

That meant, for example, that if a broker had been found guilty of wrongdoing by an NYSE disciplinary panel--but was appealing the ruling to the SEC--the hot line would report that the broker had no record.

The hot line has also given out no information about arbitration decisions settling disputes between clients and brokers. Indeed, when callers specifically asked if there were arbitration decisions against a broker, hot line operators sometimes incorrectly stated that there were none.

Some investors’ advocates say the new rules do not go far enough.

The hot line will still not disclose information about pending customer complaints or about arbitrations and civil cases in which there was a settlement, rather than a final ruling by an arbitration panel or court.

The NASD has such information in its central database. Securities regulators in some states, who have access to the database, make public information on pending complaints and settlements. California does not release the data.

Mary Calhoun, a Massachusetts-based consultant who frequently serves as an expert witness in arbitration cases, said multiple customer complaints and numerous settlements are strong indicators that a broker may not be trustworthy.

Because a few states give out such data, “this information is public already,” she said. “Why should there be a difference between what the NASD gives out and what you can get in Texas or Florida?”

O’Donnell said the NASD decided to continue withholding the data because it could falsely suggest that a broker or firm had done something wrong.

“We’ve had to balance disclosing information that would be helpful to the investor against what was fair to the industry,” he said.