2005 Federal Sentencing Guidelines
Chapter 2 - PART B - BASIC ECONOMIC OFFENSES
§2B1.4. Insider Trading
(a) Base Offense Level: 8
(b) Specific Offense Characteristic
(1) If the gain resulting from the offense exceeded $5,000, increase by
the number of levels from the table in §2B1.1 (Theft, Property Destruction,
and Fraud) corresponding to that amount.
Statutory Provisions: 15
U.S.C. § 78j and 17 C.F.R. § 240.10b-5. For additional statutory
provision(s), see Appendix A (Statutory Index).
1. Application of Subsection of §3B1.3.—Section
3B1.3 (Abuse of Position of Trust or Use of Special Skill) should be applied
only if the defendant occupied and abused a position of special trust. Examples
might include a corporate president or an attorney who misused information
regarding a planned but unannounced takeover attempt. It typically would not
apply to an ordinary
Background: This guideline
applies to certain violations of Rule 10b-5 that are commonly referred to as
"insider trading". Insider trading is treated essentially as a sophisticated
fraud. Because the victims and their losses are difficult if not impossible
to identify, the gain, i.e.,
the total increase in value realized through trading in securities by the defendant
and persons acting in concert with the defendant or to whom the defendant provided
inside information, is employed instead of the victims’ losses.
Certain other offenses, e.g.,
7 U.S.C. § 13(e), that involve misuse of inside information for personal
gain also appropriately may be covered by this guideline.
Historical Note: Effective
November 1, 2001 (see Appendix
C, amendment 617).