UPDATE 2-Couple get house arrest in insider trading case

(Adds sentencing details, background, comment from lawyer)

By Paritosh Bansal

NEW YORK Oct 4 (Reuters) - A former Morgan Stanley (MS.N) lawyer and her attorney husband who participated in an insider trading ring on Wall Street were each sentenced to six months of home confinement on Thursday.

U.S. District Judge Victor Marrero handed out more lenient sentences than recommended for the couple -- Randi Collotta and Christopher Collotta -- in view of the husband's bad health.

Christopher Collotta, 34, survived cancer and suffers from several cardiac problems, the judge said during the hearing in Manhattan federal court.

He also said this was a case where the defendants were at the "bottom of the food chain," had not conceived the scheme and profited only to a modest extent.

The Bayport, New York, couple pleaded guilty to making $9,000 through an illegal trading scheme. They were among 13 people charged criminally in March with participating in the ring, which netted more than $15 million in illegal profits overall, prosecutors said.

Randi Collotta, 30, was sentenced to four years of probation, including the six months of home confinement. She was also ordered to spend 60 days in the custody of the Bureau of Prisons such that she can continue to work.

Her husband, a lawyer in private practice, was sentenced to three years of probation, including the home confinement.

They were both also fined $3,000 each and ordered to forfeit $4,500.

The judge had originally recommended that Randi Collotta be sentenced to 12 months to 18 months and Christopher Collotta for 10 months to 16 months.

A weeping Randi Collotta asked the judge for leniency during the hearing, saying she accepted full responsibility for her actions and pleading to be allowed to stay with her husband.

"My greatest fear is that I may not be able to care for him during what could be his final days," she told the judge. "I fear that he may die without his wife at his side."

The couple pleaded guilty to conspiracy and securities fraud in May. Randi Collotta, who worked for Morgan Stanley's compliance division in New York, admitted then to giving information to her husband about upcoming mergers and acquisitions, including Adobe Systems Inc's (ADBE.O) 2005 purchase of Macromedia Inc.

"We are thankful that Judge Marrero recognized the special circumstances involved in this case," Randi Collotta's lawyer, Kenneth Breen, said after the hearing. (Additional reporting by Martha Graybow)