U.S. prosecutors are investigating an international network oftraders suspected of infiltrating banks and companies to gleanconfidential information on mega-deals, according to peoplefamiliar with the matter.

The probe by prosecutors at the U.S. Attorney's Office for theSouthern District of New York is focusing on a group of stockpickers in Europe and the Middle East who have made tens ofmillions of dollars trading ahead of media reports about takeovertalks or merger announcements by companies, according to thepeople, who asked not to be identified because the matter isn'tpublic. The investigation is part of a years-long multinationaleffort, with U.S., U.K., and French prosecutors operating onparallel tracks.

The first hint of U.S. involvement came in November, whenauthorities in Serbia arrested one of the suspects, a Geneva-basedtrader, on a U.S. warrant that alleged he had committed securitiesfraud. He was extradited to the United States in May, according toTatjana Pesic, a court spokeswoman in Belgrade. Dawn Dearden, aspokeswoman for Manhattan U.S. Attorney Geoffrey Berman, declinedto comment.