A Taipei District Court judge said Oung Ta-ming, 42, breached the trust of shareholders in his Hualon conglomerate by selling 5 million shares of Kuo Hua Life Insurance at one-fifth their price for profit.
Oung's brother, Yi-ming, and four other people also were convicted in the pounds 13m scandal and sentenced to prison terms ranging from one year to 18 months.
None of them was in court for the brief sentencing session. All have 10 days to file an appeal.
Oung Ta-ming suffered what was believed to be a stroke while in jail last month. He was released on bail of pounds 135,000 last week to await the verdict in the case.
Oung Ta-ming, whose family is one of the richest in Taiwan, and another brother, You-ming, were charged last year with breach of trust and forgery of documents for selling the stocks to Flora Chen, daughter of the then communications minister, Clement Chang, and You Hsien-teh, a professor at Tamkang University, Taipei.
Mr Chang and Professor You have denied wrongdoing.
You-ming was released on bail of pounds 23,500 but jumped bail and is now in business in Malaysia, according to local newspapers.
Oung Ta-ming was accused of selling the stocks at a cut-rate price as a favour to Mr Chang, who resigned last year to take moral responsibility for the case. No charges were filed against Mr Chang.
The scandal focused attention on Oung Ta-ming's alleged manipulation of Taiwan's stock market and his influence over politicians.
Known as 'Big Hand' in the Taiwan stock market, Oung is alleged to have manipulated share prices for profit.
Traders said he and his associates sometimes controlled daily transactions of about pounds 235m, or almost one-third of the market's turnover.
Several politicians have been accused of obtaining campaign funds for a legislative election scheduled in December by purchasing stocks that Oung allegedly recommended and then manipulated to bring them huge profits.
Taiwan's influential business magazine Excellence named the Oungs as the island's eighth-richest family last year, with wealth estimated at pounds 57m.
Their wealth includes large land holdings and interests in textiles, securities and electronics.
Judicial authorities will now ask the prosecutor's office to investigate the roles of Mr Chang and Professor You.