(NEW YORK, NY) -- A former chief executive officer of investment banking firm Keefe, Bruyette & Woods Inc. was indicted on insider trading charges on Thursday for allegedly giving tips about potential bank mergers to a porno actress who had been his mistress.

James McDermott Jr., 48, of Briarcliff Manor, N.Y., who resigned unexpectedly in June as CEO and chairman of Keefe, Bruyette, a private Wall Street firm, was charged in an eight- count indictment filed in Manhattan federal court.

Adult film actress Kathryn Gannon and Anthony Pomponio, another man with whom she was involved, were also indicted for their role in the alleged two-year insider trading scheme.

The grand jury indictment is an expansion of a three-count complaint filed against the three defendants by federal prosecutors last month.

The charges are based on allegations that McDermott stole confidential information about six upcoming mergers involving regional banks and gave it to Gannon. She in turn allegedly passed the tips to Pomponio. Prosecutors alleged Gannon and Pomponio made more than $170,000 in illegal profits based on the non-public information.

Gannon, 30, a Canadian citizen, has worked as an actress in adult films and as an escort, exotic dancer and model, according to court papers. She uses the name Marylin Star in adult films and in a sexually graphic Internet Web site, court papers said.

Keefe, Bruyette is an investment banking firm that advises companies in connection with mergers and acquisitions and specializes in the banking and financial services industries. From January 1994 through December 1998, Keefe, Bruyette acted as the financial advisor in 116 announced mergers and acquisitions of banks and thrifts.

As president of Keefe, Bruyette during 1997 and chairman and CEO from Jan. 1, 1998 until his resignation, McDermott had access to non-public information about the firm's clients.