Revisions To Federal Sentencing Guidelines For Securities Fraud And Insider Trading Cases

Posted On Tuesday, November 20, 2012
By: John A. Schwab

The U.S. Sentencing Commission recently announced revisions to portions of the federal sentencing guidelines manual related to securities fraud, mortgage fraud, and insider trading cases.  These amendments, which became effective on November 1, 2012, were made in response to two directives to the U.S. Sentencing Commission from within the Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203.

Section 2B1.1, titled “Theft, Property Destruction, and Fraud”, was revised to create special rules for determining loss in two scenarios: (1) securities fraud cases involving fraudulent inflation or deflation of the value of a publicly trade security, and (2) mortgage fraud cases in which the underlying collateral has not been disposed of at the time of sentencing.  The Sentencing Commission also revised Section 2B1.4, titled “Insider Trading”, to provide a minimum offense level of 14 where the underlying offense involved an organized scheme to engage in insider trading.     

The U.S. Sentencing Commission published a comprehensive summary which outlines the above changes and other changes effective on November 1, 2012.