Professor Douglas Berman writes about the futility of long prison sentences for white collar defendants involving fraud and insider trading. At first glance he persuasively argues that for white collar criminals ‘shaming sanctions’ could be a more effective deterrent than jail.
Isn’t the Professor really suggesting that rich men, men of culture perhaps not unlike the Professor himself, should not have to live by the rules that the rest of us must follow and if caught need not suffer the consequences the rest of us would face.
No, the real problem with sentencing in America is in too much prosecutorial power in charging decisions, too little discretion left in the hands of Judges, and the harsh sentences for victimless crimes such as routine 25 year minimum mandatory sentences for drugs. Isn’t eleven years for an assault on the free market system and a take of nearly 54 million dollars about right? Or as one observer noted, “No matter the crime, if the rewards are great enough, people will ignore the risk of getting caught.”
Would a sign saying, “I am an INSIDER TRADING THIEF,” hung around the Defendant’s neck effectively persuade others contemplating similar crimes not to corrupt capitalism?
Nor does the Professor note that the NYTs reported that Judge Howell did reduce the guidelines sentence based on personal factors including his charity work in the community, his age and his advanced diabetes which the Court noted would make his jail time harsher than time served by a typical inmate.
And the Judge makes some telling points that show shame to be a weak cure for this disease: “Insider trading is an assault on the free markets,” said Judge Holwell, who also imposed a $10 million fine and ordered Mr. Rajaratnam to forfeit $53.8 million in ill-gotten profits, “His crimes reflect a virus in our business culture that needs to be eradicated.”
Sentenced to 11 Insider Case – NYTimes.com
Ten top American fraudsters – Telegraph
Here are two paragraph excerpts from the Professor’s Time article. What Will Deter Insider Trading? | TIME Ideas | TIME.com
Raj Rajaratnam, who was convicted of masterminding the biggest hedge-fund insider trading scheme in American history, federal prosecutors urged U.S. District Judge Richard Holwell to give him at least 20 years in prison “to send a clear and unequivocal message that illegal insider trading will not be tolerated.” Judge Holwell imposed 11 years — a relatively long sentence compared to insider-trading-Hall-of-Famers such as Ivan Boesky, who served only two years in federal prison.
A variety of shaming sanctions were widely used during the 18th Century in America, in part because prisons did not then exist and in part because shaming was viewed as a humane alternative to the death penalty, banishment or brutal physical punishments. More recently, academics have debated the potential virtues and vices of modern shaming sanctions — often after a judge has ordered a shoplifter to wear publicly a sign saying “I am a thief” or a police department has published drunk drivers’ names on billboards. Because we have never tried to make white-collar offenders “pay” for their crimes through extensive and prominent use of shaming sanctions, I cannot say with confidence that this alternative form of punishment will be more effective. But because deterrence research suggests very long prison terms for white-collar offenders may greatly extend their suffering (and taxpayer-funded imprisonment costs) with no corresponding benefit to society, I think it is time to start considering creative alternatives.
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Raj Rajaratnam sentenced to 11 years in prison for insider trading – Telegraph
Raj Rajaratnam; insider trading; sentence; hedge funds; federal prison – Los Angeles Times
FBI — Hedge Fund Founder Raj Rajaratnam Sentenced in Manhattan Federal Court to 11 Years in Prison for Insider Trading Crimes
Prison Time for Inside Trading Is Climbing – WSJ.com
Sentencing Law and Policy: Purposes of Punishment and Sentencing
|Stealing fire isn’t singe free — Prometheus having his liver eaten by an eagle. Painting byJacob Jordaens, c. 1640|