CHAPTER TWO - OFFENSE CONDUCT


PART B - BASIC ECONOMIC OFFENSES


1.      THEFT, EMBEZZLEMENT, RECEIPT OF STOLEN PROPERTY, PROPERTY DESTRUCTION, AND OFFENSES INVOLVING FRAUD OR DECEIT


§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.


Commentary

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).

Application Note:

1.      Application 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 "tippee".

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).  Amended effective  November 1, 2010 (see Appendix C, amendment 746).