A UBS AG (UBS) investment banker, a former co-worker, a family friend and a former classmate have been charged criminally in an insider-trading case that allegedly reaped more than $7 million in illicit profits.

Nicos Achillea Stephanou, a UBS investment banker who has been in custody since his arrest in December, has been charged with conspiracy and two counts of securities fraud. The charges against Stephanou, 34, of London were announced publicly Thursday.

On Thursday, Joseph Contorinis, a former portfolio manager for a hedge fund in Jefferies Group Inc.'s (JEF) asset-management unit and former co-worker of Stephanou; Michael Koulouroudis, a close family friend of Stephanou; and George Paparrizos, a former classmate of Stephanou's at the University of California-Berkeley, were charged with conspiracy and securities fraud.

Each fraud charge carries up to 20 years in prison if convicted.

Contorinis, 44, of Fort Myers, Fla.; and Koulouroudis, 59, of Brooklyn, N.Y.; were arrested Thursday by the Federal Bureau of Investigation in New York and Paparrizos, 37, of Foster City, Calif., was arrested in California.

Prosecutors have alleged that Stephanou worked on the acquisition of Albertson's Inc. by a consortium of investors in 2006 and had access to nonpublic information through his work about a proposed acquisition of ElkCorp by a private-equity firm in 2006. He allegedly tipped others about the deals before they became public.

At a hearing Thursday, Assistant U.S. Attorney Reed Brodsky said the alleged tipper, a UBS banker, was cooperating with the government, but hadn't pleaded guilty to criminal charges. However, the prosecutor didn't identify Stephanou by name as a cooperator.

On Thursday, the U.S. Securities and Exchange Commission separately brought civil charges against seven people in the matter, including Stephanou, Koulouroudis, Contorinis and Paparrizos. The SEC claims the scheme resulted in more than $8 million in illegal profits and losses avoided.

The SEC also brought charges against Stephanou's father, Paparrizos's father, and Ramesh Chakrapani, a onetime Blackstone Group (BX) executive and former co-worker of Stephanou's at Credit Suisse First Boston, now part of Credit Suisse Group (CS).

Last month, Chakrapani was charged with conspiracy and securities fraud in a separate insider-trading scheme involving shares of Albertson's. He also has been charged in a separate civil case by the SEC with engaging in a $3.6 million insider-trading scheme.

Michael F. Bachner, a lawyer for Koulouroudis, and Christopher J. Morvillo, a lawyer for Stephanou, both declined comment Thursday.

A lawyer for Contorinis didn't immediately return a phone call for comment on Thursday, while a lawyer for Paparrizos couldn't immediately be located Thursday.

"Mr. Chakrapani is adamant that he never violated his duties to his employer and we expect him to be fully exonerated," said Michael Sommer, his lawyer.

Sommer noted none of the criminal complaints that became public Thursday allege a connection to his client.

Bail was set at $900,000, to be secured by $500,000 in cash or property, for Koulouroudis. Bail was set at $7 million, to be secured by $5 million in cash or property, for Contorinis.

Tom Tarrant, a Jefferies spokesman, confirmed Contorinis left Jefferies a year ago and declined further comment, citing company policy.

Federal prosecutors alleged Contorinis received a tip from an investment banker concerning the acquisition of Albertson's prior to the public announcement of the deal in January 2006. A hedge fund account controlled by Contorinis allegedly reaped profits of $7.2 million on trading in shares of Albertson's.

Albertson's was sold in 2006 to a consortium of investors that included Supervalu Inc. (SVU), CVS Caremark Corp. (CVS) and an investor group led by Cerberus Capital Management LP.

The government also alleged Koulouroudis and Paparrizos engaged in improper trading of shares of Albertson's, as well as shares of ElkCorp before it agreed to be acquired by a private-equity firm in December 2006. After a competing offer, ElkCorp ultimately was acquired by Building Materials Corp. of America in 2007.

The SEC also alleged in the civil case that Chakrapani, Stephanou, his father and Koulouroudis engaged in a scheme to trade ahead of the announcement of a proposed buyout of National Health Investors Inc. (NHI) in 2006 based on a tip by Chakrapani.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com