PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 16-3813

_____________

UNITED STATES OF AMERICA

v.

STEVEN METRO,

 Appellant 

_______________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 3-15-cr-00028-001)

District Judge: Hon. Michael A. Shipp

_______________

Argued

November 6, 2017

Before: JORDAN, HARDIMAN and SCIRICA, Circuit 

Judges.

(Filed: February 14, 2018)

_______________
2

Anne M. Collart

Lawrence S. Lustberg [ARGUED]

Gibbons

One Gateway Center

Newark, NJ 07102

Steven Metro (pro se)

32 Old Village Lane

Katonah, NY 10536

 Counsel for Appellant

Mark E. Coyne

Office of United States Attorney

970 Broad St. – Rm. 700

Newark, NJ 07102

Glenn J. Moramarco [ARGUED]

Office of United States Attorney

401 Market Street

Camden, NJ 08101

 Counsel for Appellee

______________

OPINION OF THE COURT

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JORDAN, Circuit Judge.

Steven Metro appeals from the 46-month sentence of 

imprisonment imposed by the District Court as a consequence 

of his guilty plea to one count of conspiracy to violate federal

securities laws and one count of insider trading. He contends 

that the Court wrongly attributed to him illicit financial gains 
3

actually attributable to someone with whom he was not acting 

in concert and to whom he did not provide inside information. 

Because the District Court’s factual findings are insufficient to 

support the sentence, we will vacate and remand for 

resentencing.

I. Background1

A. The Insider Trading Scheme

Metro, a former managing clerk at a prominent New 

York City law firm, engaged in a five-year insider trading 

scheme in which he abused his position at the firm by

disclosing material nonpublic information to his close friend 

Frank Tamayo. The pattern of Metro’s criminal activity 

remained fairly constant throughout the multi-year scheme. 

Between February 2009 and January 2013, he used his position 

at the law firm to obtain material nonpublic information 

concerning thirteen distinct corporate transactions. In each 

instance, after obtaining the inside information, he would meet 

with Tamayo and tell him which stocks to purchase and when. 

Tamayo would then write down the stock symbols of the 

companies whose stock he was about to acquire. 

After Tamayo left those meetings with Metro, he would 

call his personal stockbroker, Vladimir Eydelman, and arrange 

to meet him, typically at Grand Central Station. Tamayo 

would show Eydelman the stock symbols he had written down 

 1

 The facts that follow are drawn from the record that 

was before the District Court at sentencing. They are not in 

dispute, unless otherwise noted below.
4

and Eydelman would commit them to memory. Tamayo would 

then tell Eydelman when to make the trades.

Eydelman made such trades not only for Tamayo but 

also on behalf of himself, his family, his friends, and other 

brokerage clients. Metro, by and large, did not hold the

involved stocks himself and did not collect proceeds from the 

trades. Rather, he relied on Tamayo to reinvest the proceeds 

from their unlawful trades in future insider trading. When all 

was said and done, the insider trading by Eydelman, Tamayo, 

and Metro, based on Metro’s tips, resulted in illicit gains of 

$5,673,682. The District Court attributed that entire sum to 

Metro in determining the length of his sentence. 

Metro denies being aware of Eydelman’s existence until 

one year after he relayed his last tip to Tamayo, and he 

contends that he never intended any of the tips he provided to 

Tamayo to be passed to a broker or any other third party. 

B. Tamayo Cooperates with the Government

The trading activity based on Metro’s inside

information did not go unnoticed by the government. 

Eventually, an investigation was launched and government 

agents executed a search warrant at Tamayo’s home in or 

around December 2013. Tamayo promptly admitted his role 

in the scheme and began cooperating with the government. 

That cooperation included recording a January 28, 2014,

meeting with Metro in which Metro expressed his desire to 

liquidate some of the gains that had accrued since 2009, so he 

could fund a real estate transaction. Tamayo responded that he 

had asked his stockbroker – who was unnamed in the 

conversation – to help liquidate some of the assets held in 
5

Tamayo’s retirement account. A portion of that conversation

follows, as set forth in a transcript created by the government 

and provided to the District Court.

TAMAYO: [M]y stock broker . . . I also asked him to 

see if he can get me, like, 30K for you. Um, because I 

know you, um, so that might help.

[METRO]: That would help, yeah. Yeah, that would 

help.

TAMAYO: But, you know, because I know that he [the 

stock broker], obviously, has to, you know, in order to, 

uh, you know, to make everything look kosher, he 

passed it [the Inside Information] to a couple of his 

clients, you know.

[METRO]: Okay.

TAMAYO: So I said to him [the stock broker], um, I 

said, listen, is there any way you can give me like 30K, 

‘cause I can’t take it out of my, you know, because all 

that money is tied up in my retirement.

[METRO]: Right, sure, sure, right.

TAMAYO: So he [the stock broker] said, he’s thinking 

about it. I’m actually going to meet with him again, um, 

you know like Monday or Tuesday of next week. And 

then he’s gonna, he’s gonna see if he can get me cash.

[METRO]: Alright.
6

TAMAYO: So that should be good.

[METRO]: That works. Yeah, that totally works.

...

TAMAYO: If I get my broker to give you, you know, at 

least 30K, you know, we’ll take it off the. . .

[METRO]: Right, right.

TAMAYO: . . . the, uh, the 168 [[Metro’s] accrued 

share of the insider trading profits], there, so. Um, 

alright, so, let’s see . . .

[METRO]: Yeah, because we’re all cashed out at this 

point, right?

TAMAYO: Yeah.

[METRO]: We’re not holding anything.

TAMAYO: No, do you, um . . .

[METRO]: But I’m going to . . . if I can’t use the money, 

I’m not going to leave that money there, doing nothing.

TAMAYO: Uh hum. Yeah, . . . um . . .

[METRO]: You know what I mean? That doesn’t make 

sense to me. . .

TAMAYO: Yeah, I mean, it’s been a while, right?
7

[METRO]: For us, it’s been a long time. But, I’m just 

saying even if . . .

TAMAYO: No, no, as far as the last one we did [the last 

insider trading].

[METRO]: Yeah, yeah. Like a year, or kind of a little 

bit . . . but I’m not even saying that, I’m saying a legit 

thing. Because why not, I mean, that money should be 

making me money, rather than just sitting in a cash 

value.

TAMAYO: Absolutely. Um, he actually, the broker 

actually asked me about it—he’s like, anything new? I 

was like, no, you know, so.

[METRO]: But those tips, they really don’t pay off. I 

mean they pay off for us, but, what good is giving him 

[the stock broker] a tip?

TAMAYO: I know.

[METRO]: It’s not making me any money.

TAMAYO: Yeah, but you know the thing is that, it’s 

good because, it actually, you know, covers up a little 

bit, that’s all.

[METRO]: Yeah, no, it’s true. But you think he [the 

stock broker] would kick you something for the [tips].
8

TAMAYO: I know, absolutely. He might be the 

cheapest bastard around.

(App. at 175-77 (non-italicized alterations in original).)

Metro also told Tamayo during that conversation that 

“[i]f anything comes up, I’ll let you know about it for sure.” 

(Presentence Report ¶ 97.) The government arrested Metro 

less than two months after that meeting. 

C. The Presentence Report and Metro’s 

Objections

After he was caught, Metro pled guilty to conspiracy to 

violate the securities laws2 in violation of 18 U.S.C. § 371, and 

insider trading in violation of 15 U.S.C. §§ 78j(b) and 78ff. 

The Presentence Report (“PSR”) set forth an analysis of 

Metro’s sentencing exposure under the United States 

Sentencing Guidelines (“U.S.S.G.” or “guidelines”). 

Specifically, the PSR applied § 2B1.4 of the guidelines, the 

provision relevant to insider trading, to calculate the offense 

level that would determine, in part, the appropriate sentencing 

range. Pursuant to that section, Metro’s base offense level was 

8. Because the gain resulting from his conduct exceeded 

$6,500, the guidelines, under § 2B1.4(b)(1), called for an 

“increase by the number of levels from the table in § 2B1.1[.]” 

U.S.S.G. § 2B1.4(b)(1). As the PSR attributed all $5.6 million

in illicit gains to Metro, an 18-level increase was directed by § 

 2

 The indictment charged Metro with conspiracy to 

commit securities and tender offer fraud. For ease of reference, 

we describe that charge throughout this opinion as a conspiracy 

to violate the securities laws.
9

2B1.1(b)(1)(J). An additional 2-level increase pursuant to § 

3B1.2 was added because Metro had abused his position of 

trust as an employee with management responsibilities at the 

law firm. Finally, because Metro pled guilty and 

acknowledged his criminal behavior, the PSR credited him

with accepting responsibility and hence allowed a 3-level 

reduction in his offense level, pursuant to § 3E1.1(a) and (b). 

Based on a total offense level of 25 and Metro’s criminal 

history category of I, the recommended guidelines range was

57 to 71 months of imprisonment. 

Metro objected to the attribution to him of all the gains 

realized as a result of Eydelman’s trades. He argued in a 

presentence filing with the District Court that he was not, in the 

language of commentary to guidelines § 2B1.4, “acting in 

concert” with Eydelman such that Eydelman’s gains should be

attributed to him for purposes of sentencing.

3

D. Sentencing Hearing and Sentence

At the sentencing hearing, Metro renewed his objection

to the PSR’s 18-level enhancement based on all $5.6 million of

illicit gains from the scheme. In response, the government 

described for the District Court its theory of the case: namely,

that this was “a three-party scheme[,]” with Metro as the 

insider, Tamayo as the middleman, and Eydelman as the 

stockbroker. (App. at 79.) After the District Court asked 

whether the law requires that Metro “know of Mr. Eydelman 

in order to have” responsibility for Eydelman’s gains, the 

 3

 Metro also objected to the abuse of position of trust 

enhancement. The District Court’s resolution of that objection

is not a subject of this appeal. 
10

government answered that the law only requires that Metro 

“know that there is somebody else that is obtaining the inside 

information that he is passing on. And [the government has] 

to show that all three gentlemen were acting in concert.” (App. 

at 81-82.) The government then argued that it had met those 

requirements because Eydelman, the ultimate recipient of 

Metro’s tips, was critical to the insider trading, and that the 

January 28, 2014, conversation demonstrated Metro’s

awareness of Eydelman’s existence. 

Metro disputed the government’s characterization of the 

January 28 conversation, arguing that it did not support a 

finding that he had acted in concert with Eydelman because the 

conversation took place one year after the last time Metro 

provided an inside tip. According to Metro, he first learned 

that a broker (i.e., Eydelman) was involved with the scheme 

shortly before that conversation, and no fair interpretation of 

his responses shows that he had been aware of Eydelman when 

he (Metro) was passing information to Tamayo. 

The District Court overruled Metro’s objection to the 

PSR’s attribution of the full $5.6 million to him. Without 

making any explicit factual findings on the record, the Court 

stated that “[t]he commentary [to § 2B1.4] unequivocally 

attributes all the gains made by Tamayo and Eydelman to 

Metro. ... So with that, the Court also finds that United States 

v. Kluger, 722 F.3d 549 (3d Cir. 2013) is also on point and 

analogous[.]”4

 (App. at 97.)

 4

 As more fully discussed herein, Kluger deals with the 

attribution, for sentencing purposes, of insider trading gains. 

722 F.3d at 557.
11

When handing down Metro’s sentence, the District 

Court used the PSR’s guideline imprisonment range of 57 to 

71 months as a starting point. It then granted a two-level 

downward variance because of Metro’s “strong family ties” 

and “redeemable qualities,” resulting in a guideline 

imprisonment range of 46 to 57 months. The Court sentenced 

Metro to a 46-month term of imprisonment, a three-year term 

of supervised release, a $10,000 fine, and a $200 special 

assessment. Metro now appeals that sentence.

II. Discussion5

The District Court rightly looked to the insider tradingspecific guideline, § 2B1.4, in sentencing Metro. As already

noted, that section provides for a base offense level of 8, and 

then says that “[i]f the gain resulting from the offense exceeded 

$6,500, increase by the number of levels from the table in § 

2B1.1 ... .” U.S.S.G. § 2B1.4(b)(1). The commentary to the 

section explains that:

... Insider trading is treated essentially as a 

sophisticated fraud. Because the victims and 

their losses are difficult if not impossible to 

identify, the gain, i.e., the total increase in value 

realized through trading in securities by the 

defendant and persons acting in concert with the 

defendant or to whom the defendant provided 

inside information, is employed instead of the 

victims’ losses.

 5

 The District Court had jurisdiction under 18 U.S.C. 

§ 3231. We have appellate jurisdiction pursuant to 18 U.S.C. 

§ 3742(a)(1) and 28 U.S.C. § 1291.
12

U.S.S.G. § 2B1.4 cmt. background (emphasis added). Relying 

on that commentary, the District Court attributed to Metro all

of the gains realized from Eydelman’s illegal trades, which 

amounted to approximately $5.6 million. Metro argues that the 

Court failed to make sufficient factual findings to support that 

attribution and gave too broad a meaning to the phrase “acting 

in concert.” We agree.

A. General Principles and Kluger

“[W]e review the District Court’s interpretation of the 

Sentencing Guidelines de novo,” its “findings of fact for clear 

error[,]” and its “application of the Guidelines to facts for 

abuse of discretion.” Kluger, 722 F.3d at 555 (citations 

omitted). The federal sentencing guidelines are to be 

understood according to their “plain and unambiguous 

language[.]” Id. at 556 (quoting United States v. Wong, 3 F.3d 

667, 670 (3d Cir. 1993)). Commentary interpreting or 

explaining a specific guideline “is authoritative unless it 

violates the Constitution or a federal statute, or is inconsistent 

with, or a plainly erroneous reading of, that guideline.” Stinson 

v. United States, 508 U.S. 36, 38 (1993). A failure to properly 

calculate a guidelines range is a “significant procedural error.” 

Gall v. United States, 552 U.S. 38, 51 (2007). Accordingly, 

“the use of an erroneous ... range will typically require 

reversal[.]” United States v. Langford, 516 F.3d 205, 215 (3d 

Cir. 2008); see also United States v. Merced, 603 F.3d 203, 214

(3d Cir. 2010) (“If the district court commits procedural error, 

our preferred course is to remand the case for re-sentencing, 

without going any further.”).
13

With those general principles in mind, we turn to a 

review of our decision in United States v. Kluger, which 

features prominently in the District Court’s decision and the 

parties’ arguments on appeal.

Kluger involved an insider trading scheme that, like the 

one here, had an insider at a law firm disclosing material 

nonpublic information to a middleman who, in turn, relayed 

that information to a stockbroker who ultimately executed the 

illegal trades. 722 F.3d at 553-54. At sentencing, the district 

court attributed to the law firm insider all of the gains realized 

by the stockbroker, even though the insider argued that those 

gains were not foreseeable because the stockbroker traded “in 

share volumes far in excess of the number of shares that the ... 

conspirators agreed would be traded.” Id. at 554. On appeal, 

the insider challenged the district court’s gain analysis by 

arguing that the foreseeability test set out in § 1B1.3(a)(1)(B)

should have lowered the “gain” attributed to him. Id. at 557. 

Under the version of the guidelines in effect at the time the 

defendant was sentenced, § 1B1.3(a)(1) stated:

(a) ... Unless otherwise specified, (i) the base 

offense level where the guideline specifies more 

than one base offense level, (ii) specific offense 

characteristics and (iii) cross references in 

Chapter Two, and (iv) adjustments in Chapter 

Three, shall be determined on the basis of the 

following:

(1)(A) all acts and omissions committed, aided, 

abetted, counseled, commanded, induced, 

procured, or willfully caused by the defendant; 

and
14

(B) in the case of a jointly undertaken criminal 

activity (a criminal plan, scheme, endeavor, or 

enterprise undertaken by the defendant in 

concert with others, whether or not charged as a 

conspiracy), all reasonably foreseeable acts and 

omissions of others in furtherance of the jointly 

undertaken criminal activity[.]

U.S.S.G. § 1B1.3(a)(1) (2010) (emphasis added). In affirming 

the district court’s gain calculation, we determined that “the 

insider-trading guideline falls under the ‘unless otherwise 

specified’ exception of § 1B1.3,” such that § 1B1.3’s 

foreseeability test does not apply to the gain analysis required 

by § 2B1.4’s commentary. Kluger, 722 F.3d at 558-59. We 

reached that conclusion because that gain analysis 

“unequivocally attributes” to a defendant all the gains realized 

through trading by individuals “acting in concert with the 

defendant” or “to whom the defendant provided inside 

information,” without regard to the foreseeability of those 

gains. Id. at 558 (quoting U.S.S.G. § 2B1.4 cmt. background). 

Critical to our conclusion in Kluger was the defendant’s

admission that he was “acting in concert with” the stockbroker 

and that he “provided inside information” with the intent that 

it reach the stockbroker. Id.6

 Metro, in contrast, strenuously 

 6 We emphasized those facts four separate times in 

Kluger. See 722 F.3d at 558 (“[The stockbroker] was a 

‘person[] acting in concert with the defendant,’ as well as one 

‘to whom the defendant provided inside information.’” 

(citation omitted)); id. at 559 n.13 (“[W]e observe that it is 

undisputed that [the defendant] passed inside information to 

[the middleman] with the intent that the information would 
15

disputes that he either acted “in concert with” or “provided 

inside information” to Eydelman. 

B. Kluger Did Not Render § 1B1.3 Irrelevant for 

Purposes of Determining the Scope of 

Conduct for Which a Defendant Can Be Held 

Accountable at Sentencing

Adopting the approach taken in the PSR, the District 

Court concluded that Kluger controlled the sentencing 

outcome here. That of course was also the government’s 

position, but the only evidence offered by the government to 

establish that Metro had any knowledge of Eydelman, or that 

Metro had any awareness that his insider tips were received by 

anyone other than Tamayo, was the January 28, 2014,

transcript. Metro objected throughout sentencing to the

conclusion in the PSR that he acted “in concert with” or 

“provided inside information” to Eydelman, and he disputed 

that the January 28, 2014, transcript established that he had. 

The District Court, at Metro’s sentencing hearing, neither

resolved those factual disputes nor made any other factual 

findings with regard to Metro’s relationship with, or 

knowledge of, Eydelman. The Court appears to have 

 

reach [the stockbroker] who [the defendant] knew was a 

securities trader in order for [the stockbroker] to place illicit 

trades.”); id. at 561 (“[The stockbroker] is explicitly an 

individual ‘to whom the defendant provided inside 

information.’” (citation omitted)); id. at 561 n.19 (“[The 

defendant] intended [the stockbroker] to be the ultimate tippee 

because [the defendant] knew that [the middleman] would not 

exercise the vast majority of the trades on behalf of the 

conspirators.”).
16

concluded either that, in light of Kluger, Metro’s guilty plea to 

a conspiracy count naming Eydelman was a sufficient basis to 

establish the “in concert with” or the “provide inside 

information to” requirements for the attribution of gains, or

that Kluger requires that courts hold tippers accountable at

sentencing for all downstream trading resulting from that 

tipper’s inside information. Both interpretations take Kluger

too far.

Metro pled guilty to Count 1 of the indictment, which

charged him with conspiring with “Tamayo, Eydelman, and 

others” to violate the securities laws. (App. at 26.) It is clear, 

however, that the guidelines do not consider a defendant’s 

criminal liability to be co-extensive with sentencing 

accountability. The commentary to the guidelines’ “Relevant 

Conduct” provision, § 1B1.3, is explicit that “[t]he principles 

and limits of sentencing accountability under this guideline are 

not always the same as the principles and limits of criminal 

liability,” U.S.S.G. § 1B1.3 cmt. 1, and further that, “[b]ecause 

a count may be worded broadly and include the conduct of 

many participants over a period of time, the scope of” a 

defendant’s conduct for sentencing purposes “is not 

necessarily the same as the scope of the entire conspiracy,” 

U.S.S.G. § 1B1.3 cmt. 3(B). We have thus explained that the

conduct a defendant is typically held responsible for under the 

guidelines “is not coextensive with conspiracy law.” United 

States v. Mannino, 212 F.3d 835, 842 (3d Cir. 2000) (emphasis 

omitted) (quoting United States v. Collado, 975 F.2d 985, 997 

(3d Cir. 1992)).7 For that reason, we have instructed that, at 

 7

 See also United States v. Getto, 729 F.3d 221, 234 

n.11 (2d Cir. 2013) (“[T]he scope of conduct for which a 

defendant can be held accountable under the sentencing 
17

sentencing, it is essential for courts to conduct “a searching and 

individualized inquiry into the circumstances surrounding each 

defendant’s involvement in [a] conspiracy ... to ensure that the 

defendant’s sentence accurately reflects his or her role.” 

Collado, 975 F.2d at 995. The question we are faced with now 

is whether those fundamental sentencing principles apply with 

equal force in the insider trading context, given our decision in 

Kluger, and the answer is they do.

Kluger does not mandate that § 1B1.3, and its guidance 

on the importance of individual accountability at sentencing,

plays no role in determining the scope of a defendant’s relevant 

conduct in insider-trading conspiracy cases. That case holds, 

rather, that § 1B1.3’s foreseeability requirement is inapplicable 

to an analysis of illicit gain under § 2B1.4. See Kluger, 722 

F.3d at 558-59 (“[T]he insider-trading guideline falls under the 

 

guidelines is significantly narrower than the conduct embraced 

by the law of conspiracy.” (citation omitted)); United States v. 

Spotted Elk, 548 F.3d 641, 674 (8th Cir. 2008) (“[T]he 

emphasis under § 1B1.3 is the scope of the individual 

defendant’s undertaking ... rather than the scope of the 

conspiracy as a whole[.]”); William W. Wilkins, Jr. & John R. 

Steer, Relevant Conduct: The Cornerstone of the Federal 

Sentencing Guidelines, 41 S.C. L. Rev. 494, 510 (1990)

[hereinafter Relevant Conduct] (explaining that in “concerted 

activity situations,” the guidelines attempted to create a 

sentencing rule that was “not necessarily co-extensive with ...

co-conspirator liability”). At the time Relevant Conduct was 

published, Judge Wilkins was Chairman of the United States 

Sentencing Commission, and Steer was the Commission’s 

General Counsel. Relevant Conduct, 41 S.C. L. Rev. at 495 

n.a & aa.
18

‘unless otherwise specified’ exception of § 1B1.3, and, as a 

result, we will not use the reasonable foreseeability test in 

reviewing the District Court’s calculation of the offense 

level[.]”); id. at 559 (“In the circumstances we should not look 

beyond the plain language of § 2B1.4 and read a foreseeability 

test into § 2B1.4.”). The “unless otherwise specified” 

exception is not an all-or-nothing proposition. Just because 

one subsection of § 1B1.3 does “not apply to a particular count 

of conviction does not mean that other subsections of the 

relevant conduct provision cannot be given effect.” United 

States v. Maddox, 803 F.3d 1215, 1223 (11th Cir. 2015).

Amendments made by the United States Sentencing 

Commission to § 1B1.3 after Kluger, and that were given effect 

prior to Metro’s sentencing, support our conclusion that 

§ 1B1.3 remains important even in an insider trading case. The

2015 version of § 1B1.3 amended subsection (a)(1)(B), the 

provision containing guidance on when a court is to hold a 

defendant accountable for the conduct of others “in the case of 

a jointly undertaken criminal activity[.]” U.S.S.G. 

§ 1B1.3(a)(1)(B). In the pre-2015 version of the guidelines

that Kluger interpreted, that specific subsection instructed 

courts to hold defendants responsible “in the case of a jointly 

undertaken criminal activity (a criminal plan, scheme, 

endeavor, or enterprise undertaken by the defendant in concert 

with others, whether or not charged as a conspiracy)[] [for] all 

reasonably foreseeable acts and omissions of others in 

furtherance of the jointly undertaken criminal activity[.]” 

U.S.S.G. § 1B1.3(a)(1)(B) (2011). Following the 2015 

amendments, § 1B1.3(a)(1)(B) now instructs courts to hold a 

defendant responsible,
19

in the case of a jointly undertaken criminal 

activity (a criminal plan, scheme, endeavor, or 

enterprise undertaken by the defendant in 

concert with others, whether or not charged as a 

conspiracy), [for] all acts and omissions of others 

that were—

(i) within the scope of the jointly 

undertaken criminal activity,

(ii) in furtherance of that criminal 

activity, and

(iii) reasonably foreseeable in 

connection with that criminal 

activity[.]

U.S.S.G. § 1B1.3(a)(1)(B) (2015).

The amendment placed within the text of the guideline 

three distinct factors for courts to consider when conducting 

the § 1B1.3(a)(1)(B) analysis. By its own account, the 

Sentencing Commission amended the guideline to “clarify the 

use of relevant conduct in offenses involving multiple 

participants.” U.S.S.G. Supp. to App. C, Amend. 790, Reason 

for Amend. While the amendment did not signal a “substantive 

change in policy,” it did clarify that courts should go through a 

three-step analysis before attributing the conduct of others to a 

defendant facing sentencing. Id. That analysis requires courts 

to “(1) identify the scope of the jointly undertaken criminal 

activity; (2) determine whether the conduct of others in the 

jointly undertaken criminal activity was in furtherance of that 

criminal activity; and (3) determine whether the conduct of 

others was reasonably foreseeable in connection with that 

criminal activity.” Id. The main point of the amendment was 
20

to take the “scope” step of the analysis out of the commentary 

and place it “in the text of the guideline itself.” Id.

Kluger had no occasion to address the “scope” of the 

jointly undertaken criminal activity because it was not disputed 

that the defendant was aware of, and acting with, the 

stockbroker. 722 F.3d at 559 n.13. Rather, the Kluger Court’s 

analysis focused on whether conduct that was admittedly

within the scope of and in furtherance of the jointly undertaken 

criminal activity also had to be foreseeable to be attributable to 

an insider-trading defendant. Id. at 557-61. In short, the 

question of scope was not on the table in Kluger, but it is here,

and it may be in other insider trading cases.

We therefore hold that § 1B1.3 remains relevant when 

attributing to an insider-trading defendant gains realized by 

other individuals. Before attributing gains to a defendant under

§ 2B1.4’s gain analysis, a sentencing court should first identify 

the scope of conduct for which the defendant can fairly be held 

accountable for sentencing purposes under § 1B1.3. After 

identifying the scope of conduct, the court should then analyze 

that conduct to determine whom the defendant “act[ed] in 

concert with” and to whom he “provided inside information[.]” 

U.S.S.G. § 2B1.4 cmt. background. That may lead the court to 

attribute to a defendant gains realized by downstream trading

emanating from the defendant’s tips, but, depending on the 

facts established at sentencing, it may not.8

 Kluger does not 

 8

 We emphasize that a defendant cannot artificially 

limit his sentencing exposure by utilizing a middleman to 

convey inside information to a third party to conduct illegal 

trades when that defendant had reason to know, or was 
21

impose, as the government suggests, “what amounts to strict 

liability” on tippers, regardless of whether or not the tipper had 

any knowledge at the time he was providing the inside 

information that it would reach an individual other than the 

individual to whom he provided it. (Answering Br. at 26.) In 

fact, the government’s own argument to the District Court 

undercuts the position it has taken before us. When asked by 

the District Court whether Metro had to “know of 

Mr. Eydelman in order to have” responsibility for Eydelman’s 

gains, the government answered that the law requires that 

Metro “know that there is somebody else that is obtaining the 

inside information that he is passing on. And [the government 

has] to show that all three gentlemen were acting in concert.” 

(App. at 81-82.)

Because “the attribution of gains to a defendant can be 

critical in a guidelines sentencing range calculation,” Kluger, 

722 F.3d at 556, the “strict liability” position now taken by the 

government runs the risk of sentences being imposed on 

defendants that are excessive in relation to their criminal 

conduct.9

 Our holding today avoids that risk but remains fully 

 

willfully blind to the fact that, the middleman was passing the 

inside information to third parties.

9

 We are not alone in looking to § 1B1.3 to provide the 

proper analytical framework for assessing the scope of a 

defendant’s conduct for sentencing purposes in the insider 

trading context. Other courts of appeals have looked to that 

provision for that purpose for decades. United States v. 

Nacchio, 573 F.3d 1062, 1072-73 (10th Cir. 2009); United 

States v. O’Hagan, 139 F.3d 641, 655-56 (8th Cir. 1998); 
22

in line with Kluger. Once a sentencing court identifies the 

scope of conduct for which a defendant can be fairly held 

accountable, whether consequences flowing from that conduct

were foreseeable is not pertinent to § 2B1.4’s gain analysis.

C. The District Court Did Not Address Critical 

Factual Disputes Relevant to the Scope of 

Metro’s Conduct for Sentencing Purposes

Since we have concluded that district courts must look 

to § 1B1.3 to determine the scope of conduct for which a 

defendant can be held accountable for sentencing purposes, we 

must now consider whether the District Court made “a 

searching and individualized inquiry into the circumstances 

surrounding [Metro’s] involvement in the conspiracy ... to 

ensure that [Metro’s] sentence accurately reflect[ed] his ...

role.” Collado, 975 F.2d at 995. A district court does not meet 

that requirement if it fails to comply with the guidelines’

instruction to “resolve disputed sentencing factors at a 

sentencing hearing in accordance with [Federal Rule of 

Criminal Procedure] 32(i).” U.S.S.G. § 6A1.3(b). That rule 

mandates that, “[a]t sentencing, the court ... must – for any 

disputed portion of the presentence report or other controverted 

matter – rule on the dispute or determine that a ruling is 

unnecessary either because the matter will not affect 

sentencing, or because the court will not consider the matter in 

sentencing ... .” Fed. R. Crim. P. 32(i). The rule is “strictly 

enforced” and requires that “[a] finding on a disputed fact or a 

disclaimer of reliance upon a disputed fact ... be expressly 

made.” United States v. Electrodyne Sys. Corp., 147 F.3d 250, 

 

United States v. Stern, No. 92-3752, 1993 WL 82048, at *4

(5th Cir. Mar. 12, 1993) (not precedential).
23

255 (3d Cir. 1998); see also United States v. Freeman, 763 

F.3d 322, 339 (3d Cir. 2014) (“[I]f a defendant disputes a fact 

included in the presentence investigation report, the sentencing 

court must either resolve that dispute or state that it will not 

rely on the disputed fact.” (citation omitted)). A district court’s 

failure to comply with Rule 32(i)(3)(B) “is grounds for 

vacating the sentence.” Electrodyne Sys., 147 F.3d at 255.

The government offered only the January 28, 2014, 

transcript to establish its factual contentions. Metro, for his 

part, clearly objected to the government’s position that he 

“acted in concert with” or “provided inside information” to

Eydelman. The District Court never resolved those factual 

disputes on the record; it simply overruled Metro’s objection 

and concluded that Kluger was controlling. Had the Court’s 

assessment of Kluger been correct, it may have been justified 

in viewing as moot the factual disputes raised by Metro. But, 

as we have discussed, the assessment was in error. 

Accordingly, the factual disputes are very much alive and the 

obligation of Rule 32(i)(3)(B) to resolve those disputes

remains in force. 

When the scope of a defendant’s involvement in a 

conspiracy is contested, a district court cannot rely solely on a 

defendant’s guilty plea to the conspiracy charge, without 

additional fact-finding, to support attributing co-conspirators’

gains to a defendant. Because the District Court here did not 

resolve the key factual dispute raised by Metro, or otherwise 

provide a factual basis to support its gain analysis, there was 

not the “searching and individualized inquiry” necessary to 

ensure Metro’s sentence matched his role in the conspiracy.
24

D. A Guilty Plea Alone Is Not Necessarily 

Determinative of Sentencing Accountability

In reaching our conclusion, we do not imply that a 

defendant can contest at sentencing the factual averments 

contained in an indictment to which he pled guilty. See United 

States v. Parker, 874 F.2d 174, 177 n.1 (3d Cir. 1989) (holding 

that pleading guilty “binds [a defendant] to the accuracy of the 

facts set forth in the indictment”). That issue is not before us 

today because the indictment to which Eydelman pled guilty 

contains no facts actually linking Metro to Eydelman. Though 

it charged Metro with “knowingly and willfully combin[ing], 

conspir[ing] and agree[ing] with Tamayo, Eydelman, and 

others” to violate the securities laws, (App. at 26-27,) the 

indictment did not set out any factual basis showing that Metro 

“acted in concert with” or “provided inside information” to 

Eydelman for purposes of sentencing accountability. 

Similarly, the PSR does not contain any facts linking Metro to 

Eydelman, other than referring to the fact that Metro was 

charged with conspiring with Eydelman. And although the 

government could have elicited facts from Metro at his plea 

hearing to tie him to Eydelman, it did not.

On the contrary, at the plea hearing, the government 

established only that Metro learned about Eydelman after the 

insider trading activity had ended.

10 It asked Metro whether he 

 10 Federal Rule of Criminal Procedure 11 instructs that 

“[b]efore entering judgment on a guilty plea, the court must 

determine that there is a factual basis for the plea.” Fed. R. 

Crim. P. 11(b)(3). Here, rather than conducting the colloquy 

with Metro to determine whether there was a sufficient factual 

basis to support entering judgment on the guilty plea, the Court 
25

“enter[ed] into an agreement with Frank Tamayo to engage in 

securities transactions based on material nonpublic 

information,” to which Metro responded, “Yes,” but it did not 

ask whether he entered into an agreement with Eydelman. 

(App. at 67.) The government next asked whether Metro 

“disclose[d] the inside information to Tamayo,” to which 

Metro responded, “Yes.” (App. at 67.) It did not ask if he 

disclosed information to Eydelman. The government asked 

whether, between February 2009 and January 2013, Metro 

“provide[d] Tamayo inside information related to at least 13 

different corporate transactions so that Tamayo could profit by 

trading on the inside information[,]” to which Metro 

responded, “Yes.” (App. at 69.) The government did not ask 

whether he provided that information with the intent that it 

reach Eydelman. The government further asked, “[w]ith 

respect to the overt acts charged in the indictment, do you 

acknowledge that you and Frank Tamayo each had a defined 

role to perform certain specific acts in furtherance of your 

agreement to [violate the securities laws],” to which Metro 

replied, “Yes.” (App. at 69.) The government did not ask 

about Eydelman’s role, if any, in that agreement. The only fact 

the government did elicit from Metro concerning Eydelman 

was that “[a]fter [his] arrest,” Metro “learn[ed] that Tamayo 

used a broker named Vladimir Eydelman[.]” (App. at 69.)

The government must prove facts supporting a 

sentencing enhancement by a preponderance of the evidence. 

United States v. Napolitan, 762 F.3d 297, 309 (3d Cir. 2014); 

United States v. Tai, 750 F.3d 309, 318-19 (3d Cir. 2014). 

Perhaps the District Court thought that the government had met 

 

requested the government to develop the factual basis by 

questioning Metro. 
26

its burden to demonstrate that Metro “acted in concert with” or 

“provided inside information” to Eydelman, but the record 

gives us no basis to say that the Court indeed reached that 

conclusion. In any event, the record is insufficient to support 

the sentence given.

III. Conclusion

For the foregoing reasons, we will vacate Metro’s 

sentence and remand the case for resentencing after the District 

Court has determined whether the government has established 

by a preponderance of the evidence that Metro “acted in 

concert with” or “provided inside information” to Eydelman. 

The Court is free to reopen the record, should it determine that 

further development of the record is in order.