Possible Circuit Split in Calculating Loss Under Sentencing Guidelines

In a recent decision, the U.S. Court of Appeals for the Ninth Circuit in United States v. Berger¹ diverged from the Second and Fifth Circuits when it held that federal judges need not adhere to the loss causation principles that apply in private securities actions when calculating the amount of loss for Sentencing Guidelines purposes in criminal securities fraud cases. To the extent the Ninth Circuit’s opinion may be read as permitting sentencing judges to consider losses that cannot be traced back directly to a defendant’s fraud, it could have significant ramifications for white-collar defendants. The court’s analysis, if strictly adhered to, may also create a circuit conflict requiring resolution by the Supreme Court.

Staying Inside the Guidelines

Although the federal Sentencing Guidelines have only been advisory since the Supreme Court’s 2005 decision in United States v. Booker,² the Supreme Court has made clear that sentencing courts must still consider the Guidelines and correctly calculate the applicable Guidelines range as the first step in the sentencing process.³