July 31, 2009
Commentary on Nacchio
As noted here, the 10th Circuit issued an opinion in the Nacchio case that reverses and remands the sentencing aspect of the case. I agree with Talkleft here that this is a very technical opinion pertaining to how to determine loss in insider trading cases. The court opts for a disgorgement approach as opposed to the district court's net-profit approach. And in that regard, I wholeheartedly agree with Professor Doug Berman here, that this is a major decision. The court holds that:
We conclude that the district court's net-profit sentencing approach does not square with the plain language of the relevant guideline, § 2F1.2; therefore we reject it. We further determine that district courts must undertake "thorough analysis grounded in economic reality," Olis, 429 F.3d at 547, when sentencing defendants in insider trading cases and deem it appropriate to look to the civil sphere for guidance regarding the proper approach. We conclude that the civil disgorgement remedy provides an appropriate guidepost for sentencing insider trading cases.
What concerns me is the level of economic and mathematical skills needed by counsel and the courts to handle these cases. Clearly experts exist who understand the figures being presented, and have the ability to offer their schooled explanations to the court. But counsel and the court still need more than a basic understanding of economics to properly represent and sentence someone accused of insider trading.
(esp) (M.B.A. - U.of Chicago)
Addendum - Christine Hurt, Conglomerate Blog here
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It's simple enough to enlist the aid of a financial expert to examine/testify about the figures. However, prosecutors are unschooled and uninterested so far as financial accuracy. N.O.W., they have inflated figures to whatever would prove publicity-promoting. Judges have consistently supported inflated finances for purposes of enhancements, sentencing, and overblown restitution orders.
Posted by: FluffyRoss | Aug 1, 2009 5:42:48 AM