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They spoke in code, on hard-to-trace prepaid cellphones. They adopted nicknames, like “The Greek.” And they made secret drops of bags of cash on busy Manhattan streets.

U.S. prosecutors charged 14 people, including prominent Wall Street lawyers and traders, with conspiracy and fraud Thursday in a dramatic widening of an insider trading case that has already implicated top hedge fund managers and Silicon Valley executives.

Embracing the tactics of mobsters and drug dealers, prosecutors said the sophisticated ring swapped advance knowledge of takeovers, including a 2007 buyout of Quebec drug maker Axcan Pharma Inc., to make quick multimillion-dollar gains.

The insider trading scheme, already the largest in U.S. history, makes a “mockery” of the U.S. financial system, said U.S. Attorney Preet Bhararam. He openly speculated the charges might be just the tip of the iceberg.

“This goes far beyond hedge funds,” he told reporters. “This case goes to the heart of fair play in the business world. It's not about aggressive traders trying to get an edge.”

The latest charges come three weeks after authorities arrested Raj Rajaratnam, the billionaire founder of the Galleon Group on insider trading related charges.

It's now implicated 20 people, including a clutch of former Galleon executives, and roughly $40-million (U.S.) in ill-gotten gains.

Mr. Rajaratnam is out of jail on a $100-million bond.

Prosecutors said the probe is continuing.

Unlike the 2003 case of Martha Stewart, the homemaking maven who went to jail for lying to prosecutors about her trades in ImClone Systems stock, the participants in the alleged Galleon schemes are sophisticated Wall Street insiders who know the system and went to extraordinary lengths to avoid detection.

Their tactics bear similarities to those often seen on HBO's The Wire and other TV crime dramas.

The defendants, who suspected their activities might be tracked by authorities, used prepaid cellphones, which they dubbed the “bat phone” to avoid detection. They also talked about stuffing bogus research reports in brokerage files to throw authorities off the actual reasons for their trades.

“The defendants [were] taking a page from the drug dealers' playbook,” Mr. Bharara said.

“This is clearly an insider trading case of unprecedented magnitude,” said Jacob Frenkel, a Washington lawyer and former U.S. federal prosecutor. “It's one for the record books.”

The largest component of the expanded case identifies former Galleon trader Zvi Goffer as the leader of a cell of lawyers, brokers and others who swapped information for cash at the height of the 2007 private equity boom. Prosecutors did not say whether the illegal networks were linked or if they worked with Mr. Rajaratnam.

Lawyer Arthur Cutillo, who worked in New York for the large and fast-growing Boston-based law firm Ropes & Gray LLP, was the alleged source of advance knowledge of several takeovers, including 3Com, Avaya, Alliance Data Systems and Axcan. He then allegedly shared this knowledge with Mr. Goffer, who now runs New York-based Incremental Capital, and several associates, who pocketed as much as $11-million in profits.

Axcan, based in Mont-St.-Hilaire, Que., was acquired by private equity company TPG Capital in November, 2007, at a significant premium to its prevailing market value.

Sensitive to accusations that the case is politically motivated, authorities denied they are out to vilify Wall Street or demonize Corporate America at a time of widespread public anger.

Authorities used wiretaps, co-operating witnesses and concealed recording devices to build their case.

“When sophisticated business people begin to adopt the methods of common criminals, we have no choice but to treat them as such.” U.S. Attorney Mr. Bhararam said.

But experts said prosecutors are clearly trying to send a message to financial markets that they aren't going to tolerate insider trading, and they're prepared to use aggressive means to root it out.

“The government is looking to send a potent deterrent message, not just on Wall Street, but on Bay Street and across the Atlantic,” said Mr. Frenkel, a white-collar crime attorney at Shulman Rogers in Potomac, Md.

Among the other suspects rounded up yesterday were Michael Kimelman, an Incremental Capital co-founder and former merger-and-acquisition attorney at Sullivan & Cromwell, lawyer Jason Goldfarb, Craig Drimal, who worked out of Galleon's offices, and Emanuel Goffer and David Plate, both with ties to Incremental Capital.

Separately, prosecutors charged Deep Shah, a former employee of ratings firm Moody's Corp., and Ali Hariri, vice-president of broadband carrier networking at wireless networking chip maker Atheros Communications Inc., with leaking confidential information as part of insider trading schemes. Mr. Hariri was arrested in San Francisco, while Mr. Shah is still at large, according to federal prosecutors.