The U.S. Securities and Exchange Commission today charged 14 defendants in what it terms “a brazen insider trading scheme” that netted more than $15 million in illegal insider trading profits on thousands of trades, using information stolen from UBS Securities LLC and Morgan Stanley & Co. Inc.

The SEC complaint alleges that eight Wall Street professionals, including a UBS research executive and a Morgan Stanley attorney, two broker-dealers and a day-trading firm participated in the scheme. The defendants also include three hedge funds, which were the biggest beneficiaries of the fraud.

The commission explains that the scheme involved unlawful trading ahead of upgrades and downgrades by UBS research analysts and corporate acquisition announcements involving Morgan Stanley’s investment banking clients. “The ringleaders of the UBS part of the scheme went to great lengths to hide their illegal conduct, first through a clandestine meeting at Manhattan’s famed Oyster Bar and eventually the use of disposable cell phones, secret codes and cash kickbacks before the scheme unraveled,” it says.

None of the allegations have been proven.

According to the SEC complaint, an executive director in the equity research department at UBS, provided material, nonpublic information concerning upcoming UBS analyst upgrades and downgrades to traders in exchange for sharing in the illicit profits from their trading on that information. The SEC said that they illegally traded on this inside information personally, for the hedge funds one of them managed, and for the registered broker-dealers where the other was a trader. It also alleges that they had a network of downstream tippees who illegally traded on this inside information, including a third hedge fund, a day-trading firm, and three registered representatives at Bear, Stearns & Co. Inc.

Several of those who illegally traded on the UBS information, and others, also traded ahead of corporate acquisition announcements using information stolen from Morgan Stanley, the SEC is claiming. According to the complaint, an attorney in the global compliance department of Morgan Stanley, together with her husband, an attorney in private practice, provided material, nonpublic information concerning upcoming corporate acquisitions involving Morgan Stanley’s investment banking clients to a registered rep at a Florida broker-dealer. He then traded on this information and shared his illicit profits with the lawyers. He also also tipped a registered rep at Bear Stearns, who traded on the information and tipped a colleague at Bear Stearns, along with one of the traders that also traded on the UBS information.

“Our action today is one of several that will make very clear the SEC is targeting hedge fund insider trading as a top priority,” said SEC chairman Christopher Cox in a news release.

“Today’s events should send a message to anyone who believes that illegal insider trading is a quick and easy way to get rich. No matter how clever you are, no matter how hard you try to avoid detection, you underestimate us at your peril,” said SEC enforcement director Linda Chatman Thomsen.

“Illegal insider trading undermines the level playing field that is the hallmark of our capital markets. It is, however, particularly pernicious when Wall Street insiders — who derive their already substantial livelihood from the capital markets and those markets’ investors — shamelessly compromise the markets’ integrity and investors’ trust for a quick buck,” she added.

SEC associate director of enforcement Scott Friestad called the case one of the largest SEC insider trading cases against Wall Street professionals since the days of Ivan Boesky and Dennis Levine. “It involves fraud by employees of some of the biggest brokerage and investment banking firms in the country. We will do everything possible to make sure that, in addition to any other remedies or sanctions imposed, none of these individuals ever works in the securities industry again,” he said.

As a result of the conduct described in the complaint, the commission alleges that each named defendant violated the antifraud provisions of the federal securities laws. The commission’s complaint seeks permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the imposition of civil monetary penalties.

The commission acknowledged the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation, adding that its investigation is ongoing.