Insider Tips Case Shows 3rd Circ.’s Caution On Sentencings

Types : In the News

A recent Third Circuit opinion that scrapped a nearly four-year prison sentence for a former Simpson Thacher & Bartlett LLP managing clerk convicted in a $5.6 million insider trading scheme is consistent with a wider pattern by the appeals court of taking a hard look at sentencing overreaches, court watchers say.

In finding that prosecutors failed to show defendant Steven Metro was aware of a third individual trading on the information he’d provided, the Third Circuit made clear that without evidence a defendant was working in concert with a third party, it is not appropriate to hold him responsible for that party’s gains.

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“It’s good to see the Third Circuit appropriately cabin the sentencing to the actual scope of the conspiracy that was in front of it,” said Montgomery McCracken Walker & Rhoads LLP partner Lathrop Nelson.

Nelson added that while the conspiracy count to which Metro pled guilty named all three individuals, the appeals court made clear that criminal accountability and sentencing accountability are not the same.

“This is a welcome example of a court looking beyond the conclusory allegations in an indictment and looking at the actual facts in the indictment — in which there were none supporting the allegations — and the facts that were presented to the sentencing court for sentencing determination,” he said.

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