Randi Collotta, 30, a former employee of Morgan Stanley in Manhattan, and her husband, Christopher Collotta, 34, who worked in private practice, were among 13 people who were criminally charged in the case. They have each been free on $250,000 bail.
The government said the inside trading network relied on insiders at Morgan Stanley and Co. and UBS Securities LLC to steal valuable secrets from the companies. It also alleged a Banc of America Securities LLC broker accepted cash kickbacks and two former representatives of Bear Stearns & Co. obtained UBS inside information.
The Securities and Exchange Commission has described the case as one of the most pervasive Wall Street insider trading rings since Ivan Boesky and Dennis Levine engaged in notorious insider-trading schemes in the 1980s.
According to prosecutors, Randi Collotta was an associate in Morgan Stanley's global compliance division when she passed inside stock tips to her husband, who gave it to others, resulting in illegal profits of hundreds of thousands of dollars between September 2004 and August 2005.
Others made money from the tips and then paid Christopher Collotta cash that represented a portion of their profits, according to an indictment.
The Collottas and three others had been charged with conspiracy to commit securities fraud and securities fraud, which carry potential penalties of up to 25 years in prison.
When they announced the case in March, prosecutors and SEC officials said the defendants included registered representatives, compliance personnel and hedge fund portfolio managers who illegally used hundreds of tips over five years.
U.S. Attorney Michael Garcia said at a news conferencing announcing the case that Wall Street professionals repeatedly traded on secrets revealed to them by insiders at UBS and Morgan Stanley.
Stock upgrades and downgrades by UBS and impending corporate acquisitions involving Morgan Stanley clients were relayed to others so a few investors could cash in before the news hit the market, authorities said.
The SEC said the ringleaders of the UBS part of the scheme went to great lengths to hide their illegal conduct, with tactics including a clandestine meeting at Manhattan's famed Oyster Bar and eventually the use of disposable cell phones, secret codes and cash kickbacks.
At least three people besides the Collottas had already pleaded guilty to charges in the case and were awaiting sentencing.