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U.S. Sentencing Commission wants to increase insider trading penalty

The U.S. Sentencing Commission is an agency that establishes sentencing policies and practices for the federal court system. The agency believes that insider trading has become widespread enough to recommend that judges take a more serious stance on sentencing after a conviction for the white collar crime.

The commission is not the only one who feels this way, the Justice Department has made it clear that they encouraged the recommendation. Both the commission and the Justice Department believe that the increased penalties should be focused on individuals working on Wall Street.

Officials said that there was a difference between people working on Wall Street making an illegal trade than an average person who invests based on insider information. Those who work in the industry "are routinely presented with the opportunity to commit insider trading offenses, and, thus, higher sentences are needed to ensure that those temptations will not be acted upon," said a department official.

If acted upon, the recommendation could cause some individuals to face sentences that are months or even years longer than others. Some experts suggest that this could unfairly affect people in the middle who do not have the same knowledge as those on Wall Street.

Increasing sentences based on the classification of the individual is a risky behavior and one that could lead to disparity in sentencing. Race was once used -- and often argued to remain to this day -- as a basis for disparate sentencing. The example may seem extreme in comparison, but where should the line be drawn?

Source: The Wall Street Journal, "Longer Sentences Sought for Insider Trading," Brent Kendall, April 15, 2012

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