Level Global Investors LP co-founder Anthony Chiasson was sentenced to 6 1/2 years in prison for using illegal tips funneled to him from analysts and company insiders to make $68 million for his hedge fund.

U.S. District Judge Richard Sullivan handed down the sentence today in Manhattan federal court, setting aside more severe recommendations by prosecutors and federal guidelines. Sullivan presided over the six-week jury trial that ended in Chiasson’s conviction for conspiracy and securities fraud.

Chiasson, 39, of New York, began his career on Wall Street at Salomon Brothers and later left Steven A. Cohen’s SAC Capital Advisors LP to start his own hedge fund. He had asked Sullivan to impose a prison term shorter than the 10 to 13 years recommended by the guidelines. Sullivan, who said today that the proper range was eight to 10 years, still chose a lesser term.

“It is not embezzling, but it was cheating to realize tremendous profits of tens of millions of dollars,” he told Chiasson at the hearing. Sullivan rejected Chiasson’s request to remain free while he appeals and ordered him to surrender in 90 days, recommending a federal prison camp in Otisville, New York. He also ordered Chiasson pay a $5 million fine and would order forfeiture to be determined at a later date.

Six others charged with being part of the insider-trading ring have pleaded guilty and are cooperating with a U.S. probe increasingly focused on Stamford, Connecticut-based SAC Capital and Cohen, its founder. The cooperators include Jon Horvath, a former analyst at SAC’s Sigma unit. In March, Michael Steinberg, an SAC portfolio manager to whom Horvath reported, was indicted for insider trading. He has pleaded not guilty. Cohen, 56, hasn’t been charged with a crime and has denied any wrongdoing.

In November, the U.S. charged Mathew Martoma, a former fund manager for SAC’s CR Intrinsic Investors, with what prosecutors called the biggest insider-trading scheme in history. Manhattan U.S. Attorney Preet Bharara said Martoma helped SAC make $276 million on illegal tips about an Alzheimer’s drug by trading in shares of Elan Corp. and Wyeth LLC.

SAC agreed to pay $600 million to settle a Securities and Exchange Commission lawsuit tied to Martoma’s insider-trading at the fund’s CR Intrinsic unit. Martoma has pleaded not guilty and is awaiting trial.

Chiasson Sentence

Chiasson’s prosecutors said in a sentencing memo that the hedge fund manager should serve eight to 10 years, arguing he was a member of a “criminal club that exchanged inside information about multiple technology stocks over nearly a two- year period.”

Defense lawyers cited his charitable work, including his effort to keep open his Catholic Jesuit high school in Portland, Maine, the creation of a scholarship program for his alma mater, Babson College, and contributions to the Robin Hood Foundation and the Michael J. Fox Foundation.