A cocktail of events including the economic downturn, financial scandals rooted in events that sometimes escaped the initial attention of regulators, and media-friendly criminal trials involving a mix of high-profile professionals and wiretap evidence that historically has been reserved for prosecuting more traditional criminal organizations has helped fuel the stated desires of Congress and the executive branch to combat securities fraud more aggressively. One consequence of this phenomenon is that the U.S. Federal Sentencing Guidelines, which govern federal sentencing hearings, will soon set forth several new provisions that seek to “crack down” on securities-related offenses.
Each year, the U.S. Sentencing Commission promulgates amendments to the guidelines that become effective automatically, absent intervention by Congress. Consistent with directives issued to the commission via the Dodd-Frank Wall Street Reform and Consumer Protection Act, this year’s crop of amendments, set to take effect on November 1, include several revisions to the guidelines that govern sentences for convictions involving securities fraud and insider trading. The most important amendment, discussed immediately below, pertains to the definition of “actual loss” in securities cases, the critical starting point for determining a defendant’s advisory guidelines sentencing range. Other amendments, discussed further herein, share the goal of enhanced punishment but appear less likely to have much practical effect on sentencing outcomes in securities cases.
