17 Charged in Insider-Trading Scheme Involving AT&T; Deals : Crime: Two former executives and 15 other people are accused of illegally cashing in on stock of acquisition targets.

NEW YORK —  In one of the biggest insider-trading cases filed in recent years, federal authorities on Thursday accused two former AT&T; executives and 15 friends and relatives of illegally trading on advance knowledge of planned acquisitions by the telecommunications giant.

The U.S. attorney’s office in Manhattan obtained criminal indictments against six of the individuals, while the two former AT&T; executives--one of whom was the alleged mastermind--pleaded guilty to separate criminal charges and are understood to be cooperating with prosecutors.

In addition, the Securities and Exchange Commission filed civil insider-trading charges against all 17. The group was said to have netted about $2.6 million in illicit profits.

The alleged scheme, involving repeated leaks of planned major acquisitions by AT&T;, is widely seen as an embarrassment for the company, whose stock is the most widely held of all U.S. firms.

“This indictment sends a clear message that insider trading will not be allowed to erode investor confidence in the stock market,” said Mary Jo White, the U.S. attorney in Manhattan. “The public demands a level playing field for all investors.”

Prosecutors said the company itself is not accused of any wrongdoing and has been cooperating with the investigation.

The alleged conspiracy centers on Charles Brumfield, a vice president in AT&T;’s human resources department in New Jersey, who retired from the company in 1993. Brumfield, who now lives in Palm Beach, Fla., pleaded guilty to fraud charges and faces a sentence of up to 10 years.

Between 1988 and 1991, Brumfield learned through his job of AT&T;’s plans to acquire Paradyne Corp., NCR, Digital Microwave and Teradata Corp., according to prosecutors. (The company ultimately abandoned its pursuit of Digital Microwave.)

He allegedly shared the information with his son, Joseph; an AT&T; executive who worked under him, Thomas Alger, and several friends, some of whom allegedly passed the information on to others.

The friends and relatives allegedly made steep profits on the information by purchasing the stock and stock options of the acquisition targets before AT&T; publicly announced plans to buy the companies. They allegedly then shared their profits with Charles Brumfield and Alger, paying them in cash and with checks made out to bank accounts Brumfield secretly controlled.

“With the assistance of Thomas Alger, his close friend and subordinate at AT&T;, Brumfield orchestrated widespread trading in securities of those companies through a circle of family and friends in New York, New Jersey, Illinois, Florida and North Carolina,” the SEC said.

In addition to securities fraud, the broad criminal indictment charges that several of the defendants engaged in a conspiracy to thwart the SEC investigation.

AT&T; said in a statement that it was “deeply concerned with the alleged violations” of a company policy warning employees against misusing confidential information.

Those indicted Thursday face possible sentences of 15 to 45 years if convicted on all counts. Those named in the SEC charges could face civil penalties and be forced to pay back profits from the scheme.