Stay current on changes and developments in corporate law with a wide variety of resources and tools.
By Yin Wilczek
Jan. 9 — The U.S. Sentencing Commission Jan. 9 voted to publish proposed amendments to its economic crime guideline that would direct federal courts to consider gain, rather than loss, in imposing sentences for fraud-on-the-market offenses and for submitting false information to the Securities and Exchange Commission.
In its proposal, the commission noted that although stock price manipulation cases “occur infrequently,” commentators have observed that the cases are complex, resulting in “courts applying a variety of methods to determine the appropriate” sentence enhancement.
“We have heard criticism from some judges and members of the bar that the fraud guideline may be fundamentally broken, particularly for fraud on the market cases,” said Judge Patti B. Saris, who chairs the commission, in a release.
“Based on our extensive examination of data, we have not seen a basis for finding the guideline to be broken for most forms of fraud, like identity theft, mortgage fraud, or healthcare fraud, but this review has helped us to identify some problem areas where changes may be necessary,” Saris said. “We believe our proposed amendment will help make the guideline clearer, more reflective of practical and legal realities, and more useful for courts and litigants.”
According to the commission, the median enhancement for fraud-on-the-market cases in fiscal years 2012 and 2013 was 14 levels, and the average sentence was 48 months.
The proposed amendments also involve the commission's past work to implement § 1079A(a)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provision directed the commission to review and amend, if necessary, the guidelines applicable to individuals convicted of securities fraud to ensure they provide adequate deterrence and appropriately account for the harm suffered by the public and the financial markets.
In other amendments, the commission proposed revising the economic crime guideline's definition of “intended loss” and providing a new enhancement for cases in which one or more victims suffered substantial financial hardship.
The commission is seeking comments on the proposed revisions, which are due March 18. The commission will hold a public hearing on the proposed amendments March 12 in Washington.
The commission's proposed revisions to the fraud guideline come after several years of studying sentencing data and other issues, and reaching out to criminal law experts and other stakeholders. According to a presentation at the commission's Jan. 9 meeting, in fiscal year 2012, embezzlement and theft were the most common crimes sentenced under the guideline, constituting 25.4 percent of the cases. Miscellaneous frauds categorized as “all other” were next at 13.1 percent, after which was mortgage fraud (11.4 percent).
Securities and investment fraud constituted 3.3 percent of the crimes sentenced under the guideline in FY 2012.
To contact the reporter on this story: Yin Wilczek in Washington at email@example.com
To contact the editor responsible for this story: Ryan Tuck at firstname.lastname@example.org
The proposed amendments are available at http://www.ussc.gov/sites/default/files/pdf/amendment-process/reader-friendly-amendments/20150109_PRELIM_RF_amendments.pdf.
The commission's release is available at http://www.ussc.gov/sites/default/files/pdf/news/press-releases-and-news-advisories/press-releases/20150109_Press_Release.pdf.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)