(FORTUNE Magazine) – ''Other shoes will drop,'' predicted Securities and Exchange Commission Chairman John Shad shortly after the SEC's stunning arrests of Richard Wigton, Robert Freeman, and Timothy Tabor on charges of insider trading (which they deny) and the arraignment of Martin Siegel. Siegel is the investment banker who fed information to arbitrager Ivan Boesky and implicated the other three. The SEC surely has more investment bankers on its hit list, and Congress is moving to enact legislation limiting hostile takeovers and toughening laws against insider trading. In addition, shareholders and companies caught in what is coming to be called Greedgate are preparing lawsuit after lawsuit. Some may be aimed at GE. It has enticingly deep pockets and paid a reported $600 million last April for Kidder Peabody, where Siegel and two of the accused felons once worked. Congress is now more likely than ever to tighten the rules of the takeover game. Watch for a shortening of the ten-day period that investors have before they must disclose stock holdings of 5% or more to the SEC. The ten-day window has allowed raiders to make sneak attacks, using traders now perceived to be as leaky as a bad umbrella. Congress may also extend the notice period for tender offers from 20 days to two or three months, impose a two-week cooling- off period during which a bidder that has terminated a tender offer would be unable to buy or sell the target company's stock, and require a formal tender offer for any purchase of a company's stock that exceeds 15% of shares outstanding. To root out more inside traders, the government is likely to give the SEC a raise. The Administration has boosted its request for the SEC's fiscal 1988 budget by $30.5 million; Congress will probably top that. Last August, Litton Industries set the precedent for insider trading lawsuits by suing Shearson Lehman Brothers, former employer of inside trader Dennis Levine, who has been sentenced to two years in prison. The still pending suit claims that Levine's illegal dealings in Itek Corp. raised the price Litton eventually paid for the defense contractor. Now corporations that were advised in takeover deals by Siegel when he was at Kidder Peabody and by Freeman of Goldman Sachs are pondering their options. Nestle executives say they are restudying the $3-billion acquisition of Carnation, which was represented by Kidder. According to a complaint filed by the SEC, Marty Siegel tipped off Boesky that Carnation would be sold, and Boesky made a $28.3- million profit on the deal. Says James H. Ball, general counsel for Nestle Holdings: ''Arguments could be made that Nestle paid too much for Carnation because of insider trading, and that Carnation had a problem with Kidder's breach of fiduciary duty.'' Though GE is not commenting on the current cases, analysts say that the company's lawyers are sure to be working into the night figuring whether GE could be liable for Kidder's problems and, if so, how it can minimize the damage. Says Gail S. Landis, an analyst with Sanford C. Bernstein & Co.: ''If the sellers misrepresented what GE was buying, it would do anything to get it righted. GE is not going to be burned.''