The investment scheme backfired when UBS stock remained stable after the computer attack and Roger Duronio lost more than $23,000.
A federal judge in New Jersey sentenced Duronio, 64, to 97 months in prison and ordered him to make $3.1 million in restitution to his former employer, the U.S. attorney's office said in a statement.
Duronio was convicted on July 19 of one count of securities fraud and one count of computer fraud in the 2002 case.
Duronio quit his job as a systems administrator in February 2002 after repeatedly expressing dissatisfaction about his salary and bonuses, the statement said.
He then planted malicious computer code known as a "logic bomb" in about 1,000 of PaineWebber's approximately 1,500 networked computers in branch offices. On March 4, 2002, the "bomb" detonated and began deleting files.
Duronio attempted to profit from the attack, the statement said. He bought more than $23,000 in put option contracts for UBS AG stock, betting the stock's price would go down after his "logic bomb" went off.
But, according to testimony at his trial, the stock remained stable after the computer attack and Duronio lost all of his investment.