A former Janney Montgomery Scott L.L.C. trader on Wall Street was among four people arrested yesterday by the FBI accused of taking part in a scheme to reap millions of dollars in kickbacks.

Authorities said Joseph Lando, who worked for Philadelphia's Janney from May 1997 through July 2005, was a central player in an elaborate scheme involving eight Wall Street firms illegally profiting from "stock-loan" trading.

Lando, 35, of central New Jersey, was arraigned in federal court in New York on securities-fraud and other charges after his arrest. He pleaded not guilty and was released on $300,000 bail, said Robert Nardoza, spokesman for the U.S. Attorney's Office there.

Lando's attorney, Michael F. Bachner of New York, did not return calls for comment.

A second former Janney employee, Andrew Caccioppoli, is scheduled for arraignment today, Nardoza said.

Karen Shakoske, spokeswoman for Janney in Center City, said the firm's involvement in the case ended "some time ago." The New York Stock Exchange's regulatory body fined Janney $2.5 million last August for its failure to have adequate controls.

The charges against Lando and the others were part of a four-year federal crackdown on fraud in stock-loan trading departments on Wall Street. Loans of shares are often used to cover so-called short sales.

Investors sell a stock "short" when they think it will fall in value. They borrow the shares and sell them in the hope that they will be able to buy them back for less, pocketing the difference as profit.

Stock-loan traders use stock "finders" to locate shares for their transactions.

From at least 1999 through early 2005, 22 individuals from eight companies conspired with 17 phony stock-loan finders to skim $10 million in profits, according to a complaint filed last September by the Securities and Exchange Commission.

The SEC complaint says Lando, for example, lent shares in Janney's account to a trader at another company involved in the scheme for no fee. That firm, in turn, lent the shares to a third firm for a fee, and Lando and his partner would split the fee.

Lando also arranged for his sister and her husband to receive $343,497 in finders fees even though they performed no services, the SEC alleged.

The SEC said some of the conspirators met at New York bars and restaurants to exchange thousands of dollars in cash, sometimes wrapped in newspapers or stuffed in envelopes. The phony stock finders included a U.S. letter carrier, a perfume salesman, and a dental receptionist.

"The defendants entered into sham trades to enrich themselves and paid kickbacks and bribes either to buy their coconspirator's business or to steal money for themselves and their family members," Benton J. Campbell, U.S. attorney for the Eastern District of New York, said in a statement. "Such conduct undermines the public's confidence in the nation's securities markets and will be vigorously investigated and prosecuted."

Campbell's office said 18 defendants had already pleaded guilty in that district to federal kickback and bribery schemes in the stock-loan industry.

Others arraigned yesterday were Darin DeMizio, a former supervisor at Morgan Stanley; Robert Johnson, a purported stock-loan finder at a company named Tyde Inc.; and Ken Suarez, a manager at Schonfeld Securities L.L.C. Like Lando, the three pleaded not guilty. They were released on $500,000 bail each, Nardoza said.

Morgan Stanley spokeswoman Mary Claire Delaney told Bloomberg News that the firm cooperated with the investigation. Telephone numbers for Tyde and Schonfeld were either disconnected or unavailable.

Caccioppoli, who managed Janney's securities-lending department between January 2001 and June 2005, allegedly arranged for Janney to pay his sister, a dental secretary in New York, and her husband, a letter carrier, $365,462 in finders fees for which they did no work.

Caccioppoli's attorney, Joseph Corozzo, did not return calls for comment.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.