Steve Marcus / Reuters Hedge-fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors, responds to a question at the SkyBridge Alternatives Conference in Las Vegas on May 11, 2011.

Billionaire hedge-fund titan Steven A. Cohen, one of the most high-profile and controversial Wall Street figures of the past decade, has been implicated in what federal officials are calling “the largest insider-trading case ever charged by the SEC,” according to the Wall Street Journal.

Cohen, the founder of SAC Capital Advisors, wasn’t charged or mentioned by name in the federal criminal complaint unsealed on Tuesday. But according to the Journal, which cited people familiar with the matter, Cohen is referred to as “Portfolio Manager A” in a parallel civil complaint filed by the Securities and Exchange Commission, also released on Tuesday.

In the criminal complaint, federal prosecutors charged Mathew Martoma, a former portfolio manager at SAC Capital subsidiary CR Intrinsic Investors, with receiving and acting upon confidential information gleaned from a neurology professor who played a key role in a major pharmaceutical trial.

The SEC complaint alleges that Portfolio Manager A — who was not named — collaborated closely with Martoma in making the trading decisions at the center of the alleged $276 million insider-trading scheme. The plot allegedly involved a clinical trial for an Alzheimer’s disease drug called bapineuzumab that was being jointly developed by two pharmaceutical companies, Elan Corp. and Wyeth, which was subsequently bought by Pfizer. According to federal regulators, “the illicit gains generated in this scheme make it the largest insider-trading case ever charged by the SEC.”

The complaints unsealed on Tuesday are part of the federal government’s ongoing investigation into insider trading in the hedge-fund industry — a probe that has already led to the convictions of former Galleon Group founder Raj Rajaratnam and former Goldman Sachs director and McKinsey managing director Rajat Gupta. Rajaratnam is currently serving an 11-year prison sentence, and last month Gupta was sentenced to two years in prison.

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“The charges unsealed today describe cheating coming and going — specifically, insider trading first on the long side, and then on the short side, on a scale that has no historical precedent,” Manhattan U.S. Attorney Preet Bharara said in a statement. “As a result of the blatant corruption of both the drug research and securities markets alleged, the hedge fund made profits and avoided losses of a staggering $276 million, and Martoma himself walked away with a $9 million bonus for his efforts.”

Martoma, 38, has been charged with one count of conspiracy to commit securities fraud and two counts of securities fraud; each fraud count carries up to 20 years in prison. Martoma was arrested and taken into custody by the FBI at his home in Boca Raton, Fla., at 6:30 a.m. Eastern time on Tuesday, according to an FBI spokesperson cited by the Journal. He was released on $5 million bail and is scheduled to return to court on Monday in Manhattan, according to the Associated Press.

In the civil complaint, the SEC alleged that Martoma “illegally obtained confidential details” in the summer of 2008 from Dr. Sidney Gilman, 80, a professor of neurology at the University of Michigan Medical School, who served as chairman of the safety-monitoring committee overseeing the drug trial. Martoma allegedly connected with Gilman through an unnamed “New York–based expert-network firm.”

After Gilman allegedly provided Martoma with what the civil complaint describes as “material nonpublic information about the ongoing clinical trial,” Martoma “caused” several hedge funds to trade more than $960 million in Elan and Wyeth securities. After the alleged insider trading occurred, Martoma received a $9.3 million bonus.

“Today’s record-setting insider-trading case reinforces the cold, hard lesson of so many other recent cases that when you trade on inside information, you’re not just betting your money but also your career, your reputation, your financial security and your liberty,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement. “Now, yet another corrupt hedge-fund manager has learned the high cost of ignoring that lesson.”

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It’s important to stress that Cohen, one of the most high-profile hedge-fund billionaires on Wall Street, has not been charged or named in either the criminal or civil complaints. But according to the Journal, each document refers to him as the “Hedge-Fund Owner” of two hedge-fund affiliates involved in the alleged scheme. Cohen has been investigated by law-enforcement officials probing Wall Street insider trading for years, according to the Journal, but Tuesday’s unsealed complaints mark the closest they have gotten to associating Cohen with alleged wrongdoing.

“Steve Cohen is the Teflon Don of Wall Street,” says Bill Singer, a partner at New York–based securities-law firm Herskovits. “The feds and the SEC have cast a lot of innuendo, but they’ve never been able to get him in the noose.”

In a statement e-mailed to TIME, an SAC spokesman wrote: “Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry.”

Charles Stillman, Martoma’s lawyer, issued the following statement cited by the Journal: “Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain. What happened today is only the beginning of a process that we are confident will lead to Mr. Martoma’s full exoneration.”

Gilman’s attorney told the Journal that his client is cooperating with federal prosecutors and the SEC. Gilman has entered into a “nonprosecution agreement” with the U.S. Attorney’s Office for the Southern District of New York, according to the criminal complaint, and has agreed to pay more than $234,000 in disgorgement and prejudgment interest, according to the SEC.