In one of the biggest insider trading cases on Wall Street since the 1980s, Michael Guttenberg, a former institutional client manager in UBS' equity research department, has been sentenced to six and a half-years in prison and ordered to pay back $15.8 million he made in the scam for running an insider trading scheme involving several hedge funds.

The Federal authorities had accused Guttenberg, who was on the investment review committee of UBS in 2001, a position that gave him access to stock recommendations by analysts before the information was made public, of illegally tipping others to upcoming analyst stock upgrades or downgrades.

The Securities and Exchange Commission said that this privy information was given to two Wall Street traders, Erik Franklin and David Tavdy, in exchange for a cut in the profits they made from trading on that information. Erik Franklin and David Tavdy in turn cut more deals and gave tips to others who made money on this information.

The Securities and Exchange Commission dubbed this as a "serial insider trading ring," where the accused made illegal trades based on advance knowledge of changes in UBS Securities' ratings on a range of stocks.

According to Guttenberg, who admitted his guilt and showed remorse for his actions started off by cutting a deal with a friend whom he owed $25,000. For squaring this debt he passed on tips and also collected a cut from the profits. The friend who agreed to the deal, made millions over the next six years for himself and a couple of hedge funds he managed.

He continued to do this from 2001 to 2006 and was paid hundreds of thousands of dollars, while others who were involved in this insider trading made more than $17.5 million, prosecutors said.

Prosecutors said that during this time Guttenberg made similar deals with others, including another hedge-fund manager where he routinely provided tips about ratings changes on stocks such as Amgen Corp., Whole Foods Market, and Union Pacific Corp.

He also passed hundreds of tips to Tavdy and Franklin, including a 2006 downgrade of Caterpillar Inc., the world's largest maker of bulldozers, and a 2006 upgrade of Goldman Sachs Group.

Guttenberg covered his tracks by using coded text messages made from disposable cell phones, and accepted his cut only in cash, authorities said.

Guttenberg was among 13 people, including former employees of Wall Street firms such as Bank of America Corp, Morgan Stanley and Bear Stearns Co Inc, who were criminally charged last year in an insider trading ring.

Guttenberg's lawyer pleaded with Manhattan Federal Judge, Deborah Batts for a lighter sentence as the former UBS executive is broke and shattered. He has paid for his mistakes by admitting his guilt and showing remorse. His wife and kids have left him and the Porsche 911 Carrera car he was driving and his house are gone.

He now lives in a spare bedroom of an apartment owned by his sister and the former Wall Street executive drawing a six figure salary, was reduced to making a few dollars a week delivering packages in a custodial job.

Judge Batts was unmoved and sentenced him to six-and-a-half-years in a minimum security prison in New Jersey, which includes three years of supervision after his release and asked him to pay $15.8 million he made in the scam.

UBS itself has faced charges for facilitating tax evasion for its American customers through the use of offshore tax havens (See: UBS under US investigation for tax evasion; senior executive detained). In August  it agreed to buy back $19.4 billion of failed auction-rate securities and pay a $150 million fine in the largest settlement in a US probe into whether banks stuck clients with hard-to-sell bonds (See: UBS follows Citigroup to settle auction securities fraud)