A tip last summer about unusual trades by a retired Croatian seamstress helped law enforcement authorities bust up an international insider trading ring that involved employees at

Goldman Sachs

(GS) - Get Report

,

Merrill Lynch

(MER)

and

Business Week

.

Federal prosecutors on Tuesday charged Eugene Plotkin, a low-level employee in Goldman Sachs' fixed-income research group, and Stanislav Shpigelman, a Merrill Lynch analyst, with orchestrating a scheme that netted $6.7 million in illicit insider-trading profits.

Prosecutors also named David Pajcin, a former daytrader and ex-Goldman Sachs employee, as a co-conspirator in the scheme. Pajcin was previously charged by prosecutors in November with engaging in insider trading by paying a printing plant employee to send him advance copies of

Business Week

, published by

McGraw Hill

(MHP)

.

Prosecutors charged Pajcin with using the advance copies to buy shares in several companies that got favorable mentions in the "Inside Wall Street" column. Some of the stocks Pajcin allegedly made advantaged trades in were

Alltel

(AT) - Get Report

and

Spectrum Pharmaceuticals

(SPPI) - Get Report

. One of the first stocks Pajcin traded was

TheStreet.com

(TSCM)

, the publisher of this Web site, which got a positive write-up in the Nov. 18, 2004, edition.

The new insider trading charges are related to the

Business Week

investigation but involve an entirely different scheme. Prosecutors allege Plotkin and Pajcin got Shpigelman to leak them confidential information about at least six mergers and acquisitions that Merrill Lynch was advising on. The deals included

Procter & Gamble's

(PG) - Get Report

acquisition of Gillette and Adidas' acquisition of Reebok.

In fact, it was a tip about unusual trading in "call options'' of Reebok in advance of the deal being announced last August that sparked the probe. A call option is the right to buy a stock at a specified price.

Regulators at the

Securities and Exchange Commission

, working with the Federal Bureau of Investigation, traced the trading back to Sonja Anticevic, a 63-year-old retired seamstress living in Croatia. They found that Anticevic made $2 million over a two-day period trading through an online broker in the U.S.

Soon after the Reebok/Adidas merger was announced last August, the SEC got a federal court order freezing the money in Anticevic's account and the investigation began in earnest.

At that point, the scheme began to unfold quickly. By the end of August authorities had found suspicious trading involving eight more individuals in Europe and the U.S. One of those individuals was Pajcin, whose aunt is Anticevic. Authorities ultimately discovered that Anticevic permitted Pajcin to make the trades for her.

In all, authorities allege that Plotkin and Pajcin orchestrated insider trading in at least 25 stocks. Plotkin is also charged with participating in the

Business Week

scheme.

"This fraud is one of the most widespread, varied and premeditated insider trading rings we have ever prosecuted,'' says SEC Northeast Regional Director Mark Schonfeld.

Besides Plotkin and Shpigelman, prosecutors also charged Juan Renteria with taking bribes to provide Plotkin and Pajcin with advance copies of the magazine.

The SEC, meanwhile, filed civil charges against eight individuals, including Pajcin's aunt, who traded on some of the insider information.