Does the ghost of Sarbanes-Oxley live when it comes to sentencing white collar criminals?

Some of the big-name CEOs who were tried and convicted in the wake of the Enron collapse received some gargantuan prison terms. Jeff Skilling started a 24-year prison term in 2006. Bernard Ebbers, of WorldCom, was sentenced to 25 years. We've certainly seen signs that financial crisis shenanigans will be punished even more harshly. This year, Lee Farkas, a former mortgage company executive, received a 30-year sentence. And just recently, Marianella Valera, a former mental health company executive, got 35 years in prison. Her codefendant had previously received a 50-year sentence. So in the Dodd-Frank era, if anything, the ceiling on jail terms has been raised. The days when white collar criminals were treated with kid-glove sentences seem long gone. Bernard Madoff course is serving a 150-year, mostly symbolic term in North Carolina.

So what about convicted insider traders? How long should they suffer in prison. The issue is relevant in light of the upcoming sentencing of convicted insider trading mastermind Raj Rajaratnam. Prosecutors want a 24-and-a-half year jail term imposed by the judge presiding over the matter, which would be perhaps the longest ever for insider trading. Prosecutors also want lengthy sentences for others who have been swept up in the crackdown. They want Zvi Goffer to go to jail for 12-and-a-half years, and they would like to put away Winifred Jiau for 10 years.

Defense attorneys of course want much shorter jail stints--sentences that would be more like the ones imposed on the convicted insider traders in the 1980s. Recall that Dennis Levine got a term of just two years. And even Ivan Boesky only took a three year prison sentence, and in some ways he was even more an insider trading mastermind that Rajaratnam. Defense attorney are arguing in part that insider trading is a victimless crime.

The respective judges mulling the sentenced have a lot to consider. It will be interesting to see how they rule. But one would expect to see sentence lengthier than the sentence imposed back in the 1980s but perhaps not as long as sentences proposed by prosecutors. Then again, one of the judges may decide to make a statement. -Jim