Call him busted. Totally busted. A trader nicknamed "Octopussy" was among nine people charged with insider trading yesterday as the feds expanded their crackdown on Wall Street. Zvi Goffer "was referred to as 'Octopussy' - as in the James Bond movie - because of his reputation for having arms in so many sources of information," said Robert Khuzami, director of enforcement for the Securities and Exchange Commission. Goffer - a former employee of Galleon Group hedge-funder Raj Rajaratnam, who was busted last month on related insider-trading charges - allegedly led a group of rogue traders and lawyers on an "illegal tip-and-trade binge" that raked in upwards of $20 million. The scheme ran between at least April 2007 and May 2008. Also arrested was Arthur Cutillo, 33, an attorney at white- shoe law firm Ropes & Gray who is accused of providing information about companies such as 3Com and Alliance Data Systems. The ring took "a page from the drug dealer's playbook," using "hard-to- trace, pre-paid cellphones in order to avoid detection," Manhattan US Attorney Preet Bharara said. According to a complaint filed by the SEC, Goffer, 32, gave one of his tipees a disposable phone so they could share information about Bain Capital's impending acquisition of 3Com. After the deal was announced, he pulled out the SIM card, bit it, broke the phone in half and disposed of the two pieces separately. Ropes & Gray was caught off-guard yesterday by the arrests. Cutillo, who worked in the firm's intellectual property group, is no longer with the firm, an insider said. "We are deeply disappointed to learn about this situation, which suggests an extreme breach of this person's duty of trust to our clients and to the firm," the company said in a statement, adding that it was "cooperating fully with authorities." Legal experts say Ropes & Gray risks losing clients, given sky-high expectations for legal professionals to remain tight-lipped. Among the firms that allegedly had their deals leaked through Cutillo were private equity bigwigs Silver Lake, Bain Capital and TPG Capital. "If you're a private equity firm and doing business with Ropes & Gray, you've got to be thinking, 'Were my deals compromised, too?' " said one private equity executive. Still, two of the PE firms named yesterday told The Post they plan to stick with Ropes & Gray, attributing the problem to an errant employee. The feds revealed that, in addition to those charged yesterday, five people had already pleaded guilty and were cooperating in the ongoing probe. In a related development yesterday, a federal magistrate denied Rajaratnam's request to reduce his $100 million bond, but allowed him to travel throughout the US if he notifies the feds in advance.

Originally published by BRUCE GOLDING and KAJA WHITEHOUSE.

(c) 2009 The New York Post. Provided by ProQuest LLC. All rights Reserved.

A service of YellowBrix, Inc.