Insider traders in U.S. face longer prison terms
U.S. judges are imposing increasingly long prison terms for insider trading, a Reuters analysis shows. The rise is at least partly driven by the bigger profits being earned through the illegal schemes, defense lawyers said.
The trend is likely to continue on Monday when former SAC Capital Advisors manager Mathew Martoma is sentenced for what prosecutors have called the most lucrative insider trading case ever brought.
The number of cases has increased, with 57 percent of the sentences imposed in the past five years. The last three years alone have seen two record sentences.
“The judges have seen a rash of these cases, so it may be there is a sense that harsher punishments are needed,” said Paul Shechtman, a defense lawyer with Zuckerman Spaeder who has been involved in insider trading cases.
Federal judges have discretion to impose any sentence, though they are required to consider advisory guidelines set by the U.S. Sentencing Commission.
“Based on our experience, the nature and scope of insider trading activity has evolved substantially, but the guidelines have not completely kept up,” he testified in 2011 before the commission.
The commission adopted changes that went into effect in November 2012 that among other things increased sentences for schemes in which defendants make calculated or repeated efforts to trade on inside information.
Source: Reuters
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