Michael Steinberg could go to prison for 31/2 years, the most senior former employee of SAC Capital Advisors LP to be convicted of insider trading, but in the eyes of a federal judge he is "a basically good man."

The words, uttered by U.S. District Judge Richard Sullivan, as he handed down the sentence on Friday, means the former portfolio manager could spend far less time in prison than prosecutors had sought. Prosecutors had asked for a sentence of 5¼ to 6½ years to send a strong deterrent message to Wall Street. Mr. Steinberg's lawyers had requested less than half that amount.

In sentencing Mr. Steinberg, Judge Sullivan cited evidence of his character supplied in 68 letters sent by his family and friends. But he also pointed to the seriousness of Mr. Steinberg's insider trading.

"They are crimes that go to the heart of living in an honest society and having a market system," he said during a hearing in Manhattan federal court. Wall Street, he hoped, would "derive lessons."

Mr. Steinberg, 42 years old, was convicted in December on four counts of securities fraud and one count of conspiracy for trading on confidential information, handing prosecutors the first verdict from a federal jury to back up allegations that there was insider trading at SAC.