Increasing White-Collar Sentences: A Bad Re-Run?
Over at Forbes, Lawrence Bader has an interesting look at the possible deterrent effect (or lack thereof) of the current wave of insider-trading prosecutions. Bader’s take? We’ve seen this movie before. Referencing a New York Times piece that predicts the effects will be “surely substantial,” Bader writes:
It struck me that this conclusion could just as easily have been made in the 1980’s, when high visibility defendants such as Ivan Boesky and Michael Milken ultimately pleaded guilty and served time in prison. Which raises the question: did the high visibility insider white collar cases of the 1980’s have a substantial deterrent effect on those who subsequently might have considered committing white collar crime?
In light of the current wave of insider trading cases, it appears not. Insider trading – like most white collar crime – appears not to be influenced by increasingly harsh sentences. Thus, even though judges routinely state that increasingly harsh sentences are an effective general deterrent to those who contemplate committing a white collar crime, the fact is that white collar crime continues to take place at a substantial rate.
Considering recent trends, it’s probable that Bader’s theory will be tested in coming years.
On the other hand, deterrence is just one of many factors that courts consider when imposing sentences in the federal system. Even post-Booker, the U.S. Sentencing Guidelines remain a major consideration at most sentencing hearings, and in fraud and theft cases, loss amounts tend to drive the guidelines calculations. As we noted back in November, the U.S. Sentencing Commission recently amended the guidelines for insider trading, setting at 14 the minimum offense level if the offense “involved an organized scheme to engage in insider trading.”