U.S. government prosecutors filed charges in one of the biggest insider-trading cases on Wall Street since the 1980s, claiming employees at UBS AG, Morgan Stanley and Bear Stearns Cos. profited from advance knowledge of mergers and stock picks.

In allegations fit for a Hollywood script, the government said a UBS executive used disposable mobile phones and coded messages to tip hedge-fund traders to imminent changes in analysts' ratings.

At Morgan Stanley, a former lawyer in the compliance department fed her husband information about pending takeovers, prosecutors said in court filings.

Thirteen people were charged by U.S. Attorney Michael Garcia in Manhattan with crimes ranging from securities fraud to conspiracy, and the Securities and Exchange Commission sued 14 defendants.

SEC enforcement chief Linda Thomsen said the schemes stretched over five years, included hundreds of tips and produced more than $15 million in illegal profits.

"It's going to hurt Wall Street's reputation because it's not just isolated people at the margins," said John Coffee, a securities law professor at Columbia University in New York.

"You've got a Morgan Stanley compliance attorney involved. This is a little like a cardinal getting caught with prostitutes in the church."

Four of the criminal defendants have pleaded guilty. Eight defendants pleaded not guilty Thursday in Manhattan federal court and were released on bail, the most being $500,000. No firm was criminally charged. All defendants declined to comment. One defendant is a Florida resident and was due to be arraigned there Thursday.

"We are outraged that a former employee allegedly stole confidential information from the firm, and we have cooperated and will continue to cooperate fully with the authorities," Morgan Stanley spokesman Mark Lake said. UBS also is cooperating said Rohini Pragasam, a representative in New York for the Swiss bank.

According to the SEC, Mitchel Guttenberg, 41, an executive director in UBS' equity-research department, offered to repay a $25,000 loan from hedge-fund trader Erik Franklin, 39, by slipping him analyst ratings in advance. As the scheme grew, the men bought disposable mobile phones so they could send each other coded messages without getting caught, the agency said.

Franklin and a colleague, David Tavdy, 38, paid Guttenberg "hundreds of thousands of dollars" and used the tips to make more than $4 million on trades in brokerage accounts they controlled, prosecutors said. Franklin traded on behalf of hedge funds including Lyford Cay Capital, Chelsey Capital and Q Capital Investment Partners LP, according to the SEC.

Guttenberg's bail was set at $500,000 Thursday by U.S. Magistrate Judge Henry Pitman. Guttenberg faces a maximum of 20 years in prison on each of four counts of securities fraud and five years for each of two counts of conspiracy to commit securities fraud.

Franklin was an employee of Bear Stearns and managed money for Lyford Cay out of the firm's New York offices in 2001, when the insider-trading scheme began, according to the SEC's complaint. Lyford Cay's investors included "certain senior officials" of Bear Stearns, the agency said. Two Bear Stearns brokers also traded on Guttenberg's tips, prosecutors said.

"This conduct didn't occur in obscure boiler rooms, but rather at what are commonly considered 'top-tier' Wall Street firms," the SEC's Thomsen said.

Regulators are growing more concerned that employees at Wall Street's biggest firms are breaking rules as they compete for the $10 billion in fees that hedge funds pay annually for prime-brokerage services. The SEC earlier this year asked at least 10 firms to turn over stock-trading records for the last two weeks of September, seeking to determine whether they leaked details about big stock trades to favored clients.

Prosecutors said Randi Collotta, 30, a compliance officer at Morgan Stanley, tipped off her husband, Christopher Collotta, 34, and Marc Jurman, 31, a broker in Florida, about deals including Penn National Gaming Inc.'s acquisition of Argosy Gaming Co., announced in 2004, and Adobe Systems Inc.'s 2005 purchase of Macromedia Inc.

Jurman traded on the information and passed it on to others, generating thousands of dollars in profits that were passed back to the Collottas and others, according to the SEC complaint.

The Collottas each face a maximum 20-year term on each of three counts of securities fraud and a maximum five-year term on one count of conspiracy to commit securities fraud.

Guttenberg, the UBS executive, pleaded not guilty. His attorney, Sean O'Shea, declined to comment, as did a lawyer for the Collottas. Franklin and Jurman are among those who pleaded guilty. Neither their lawyers nor Tavdy's attorney returned calls seeking comment.