Investment banker Dennis Levine, charged by the Securities and Exchange Commission with amassing $12.6 million in illegal profits by buying and selling stocks based on insider information, may be hiding additional profits in offshore banks, the SEC has suggested.

According to the SEC, Levine made his trades through Bank Leu International, a Bahamas-based subsidiary of a major Swiss bank. During the more than five years in which the SEC alleges that he maintained the account and profited from using confidential information about pending major corporate developments, he also removed $1.9 million in cash from that account.

"He presently appears to control yet another secret account in the Cayman Islands," the SEC memorandum noted. "He has, apparently, in the past controlled still another secret account in Switzerland.

"Given the assets which are available to Levine and his apparent proclivity for opening and using accounts in offshore banks in bank secrecy jurisdictions, it is entirely possible that Levine obtained additional illicit profits beyond those alleged in the commission's complaint," the SEC said.

The SEC memorandum was filed in response to motions filed by Levine's attorney, Martin Flumenbaum, last week. Flumenbaum is seeking a protective motion to prevent the SEC from taking depositions from Levine and his wife prior to a hearing Thursday. Levine has also objected to executing a form authorizing the transfer of funds from Bank Leu to the clerk of the court as unconstitutional. U.S. District Judge Richard Owen will hear arguments from the government in favor of continuing a freeze on Levine's assets and an order barring him from altering or destroying evidence.

Yesterday, Levine's attorney filed additional motions with the court, asking that a declaration by SEC attorney Leonard W. Wang be stricken from the record or that Wang be required to testify. Wang's declaration spells out most of the details of the SEC's allegations against Levine. Levine, a managing director of Drexel Burnham Lambert Inc. in the firm's mergers and acquisitions department, has disputed the SEC's allegations.

Flumenbaum also asked the court to direct the SEC to produce testimoney and documents about the alleged trades and about its "immunity agreement" with Bank Leu. He also asked the court to unseal papers in what was described as a related proceeding. Bank Leu has a New York branch, as well as the branch in the Bahamas.

The reference to an account in the Cayman Islands appears to relate to the SEC's allegations that Levine was attempting to move funds from the Nassau, Bahamas, bank to a bank in the Cayman Islands. The SEC made that allegation when it sought and obtained a temporary restraining order last week freezing funds and barring Levine from destroying or altering documents.

In the documents outlining its case against Levine last week, the SEC said that Levine made an initial deposit in the Bahamas account of $125,000, which was transferred on or about June 1, 1980, from an account maintained at Pictet et Cie., a Swiss bank. Later Levine deposited about $45,000 more, with at least $40,000 of that amount in cash. He made no further deposits, according to the SEC.