Scott London asked for probation for insider trading

Michael Rapoport reports yesterday in the Wall Street Journal on the sentencing filings: U.S. Attorney Asks Judge for Three Year Sentence for Former KPMG Partner.

I discussed this yesterday.

Almost bruised my jaw when it hit the keyboard after reading this sentence:

Harland Braun, Mr. London’s attorney, has requested a sentence of probation for his client, with no jail time.

Probation. Really? Yes.

That paragraph continues with quoting Mr. Braun from an interview on Tuesday.

How did I miss that when reading the government’s probation recommendation?

Check out Mr. Rapoport’s article for yourself to make sure I didn’t misread it. I previously mentioned Mr. London’s response to the presentencing report (PSR) here: Sentencing recommendation and suggestion for lighter sentence for ex-KPMG partner’s insider trading

Since writing that post, I’ve gained access to the federal filings, available through the PACER program.

The government’s filing contains this comment on page 7:

While the probationary sentence requested by defendant is too lenient and would not adequately reflect the seriousness of his crime and would undermine general deterrence, (emphasis added)

Last night I read through Mr. London’s 9/23/13 response to the PSR. It actually does not take a position on the appropriate sentencing. What it does is take exception to the probation officer’s methodology which concluded the proper sentencing guideline would be 46-57 months with downward variance to 36 months. That filing is essentially saying the starting point for sentencing was too high, by about 10 ‘levels’ in the federal sentencing calculation.

Thus, Mr. London’s position is the starting point for the government’s analysis should be much lower, presumably with downward revisions for the same reasons mentioned in the report.

The 9/23/13 response to the PSR closes with no recommendation for sentencing. It says a recommendation would follow later in a Sentencing Memorandum before sentencing. I think that is what was filed under seal on Monday.

I pondered again the US Attorney’s filing from this week. A large portion of the comments are directed to countering the points made by Mr. London in his 9/23/13 filing. Many of the comments are specifically rebutted when you consider both documents side by side.

Many of the comments on page 15 through 25 of the government’s filing on 4/7/14 are directed at the claim for probation. In particular the comments starting the bottom of page 23 are specifically directed to the need for jail time to communicate to the rest of society that even though insider trading is hard to find and harder to prove, when it is found and proved there will be jail time involved.

The argument would seem to be that as a society it is not good for us to say you can walk after committing intentional, clear, deliberate, profitable insider trading. In other words, a rapid confession doesn’t keep you out of jail.

So there you have it. The AG is recommending 3 years. Mr. London is requesting probation.

Update: 14 months.