Court Opinion

ID: 1033239
Source: CourtListenerOpinion
Date Created: 2013-07-09 19:53:46.207959+00
Date Added: 2024-06-11T11:59:24.501315
License: Public Domain

PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT
          ________________

                No. 12-2701
             ________________

      UNITED STATES OF AMERICA

                      v.

           MATTHEW KLUGER,
                          Appellant
            ________________

On Appeal from the United States District Court
        for the District of New Jersey
      (D.C. Crim. No. 2-11-00858-001)
   Hon. Katherine S. Hayden, District Judge
             ________________

            Argued April 24, 2013

   BEFORE: JORDAN, GREENBERG, and
       NYGAARD, Circuit Judges

             (Filed: July 9, 2013)
             ________________
Mark E. Coyne
Assistant U.S. Attorney
Caroline Sadlowski (Argued)
Assistant U.S. Attorney
Paul J. Fishman
United States Attorney
Office of the United States Attorney
970 Broad Street
Newark, NJ 07102

         Attorneys for Appellee

Harvey Weissbard (Argued)
Genova Burns Giantomasi & Webster
494 Broad Street
Newark, NJ 07102

Alan L. Zegas
Law Offices of Alan L. Zegas
522 Main Street
Chatham, NJ 07928

         Attorneys for Appellant

                        ________________

                    OPINION OF THE COURT
                       ________________

GREENBERG, Circuit Judge.

                               2
                         I. INTRODUCTION

       This matter comes on before this Court on an appeal from
a judgment of conviction and sentence entered against appellant
Matthew Kluger on June 4, 2012, in which Kluger challenges
only his sentence. The government initiated this criminal case
on April 5, 2011, when it filed a complaint against Kluger and
Garrett Bauer in the District Court.1 The government charged
Kluger and Bauer as conspirators in a three-man insider-trading
scheme in which Kenneth Robinson was the third participant.
The conspiracy spanned 17 years and, so far as is known,
constituted the longest such scheme in United States history.

        On December 14, 2011, Kluger entered a guilty plea to a
four-count information charging him with (1) conspiracy to
commit securities fraud; (2) securities fraud; (3) conspiracy to
commit money laundering; and (4) obstruction of justice, in
violation of 18 U.S.C. § 371, 15 U.S.C. §§ 78j(b) and 78ff(a),
and 17 C.F.R. § 240.10b-5; 18 U.S.C. § 1956(h), 18 U.S.C. §
1512(c)(2), and 18 U.S.C. § 2. Kluger pled guilty pursuant to a
plea agreement which did not include a stipulation as to his
guidelines sentencing range. On June 4, 2012, the District Court
sentenced Kluger to a 60-month custodial term on Count I and
144-month custodial terms on each of Counts II, III, and IV, all
four terms to be served concurrently, for a total custodial term of

1
  On December 8, 2011, Bauer entered a guilty plea. The
District Court sentenced him on June 4, 2012, following which
he filed an appeal but we have affirmed the judgment in his
case. See United States v. Bauer, No. 12-2754.

                                3
144 months (12 years), a term thought to be the longest insider-
trading sentence ever imposed. The sentence included a $400
special assessment, a three-year term of supervised release to
follow the custodial term, and occupational restrictions relating
to Kluger‟s employment in the securities industry.

       Following a separate hearing on the same day, the
District Court sentenced Bauer to a 60-month custodial term on
Count I and 108-month custodial terms on each of Counts II, III,
and IV, all four terms to be served concurrently, for a total
custodial term of 108 months (9 years). Bauer‟s sentence also
included a $400 special assessment, a three-year term of
supervised release, and occupational restrictions.

       On April 11, 2011, Robinson, the third conspirator who
was the “middleman,” in the insider-trading scheme because
Kluger passed inside information to him and he, in turn, relayed
the information to Bauer who executed the trades, pled guilty to
a three-count information for securities fraud. The District
Court on June 5, 2011, sentenced Robinson to concurrent 27-
month custodial terms on all three counts for a total custodial
term of 27 months to be followed by a three-year term of
supervised release. The Court also included a $300 special
assessment in Robinson‟s sentence. Robinson‟s sentence was
far below his guidelines range of 70 to 87 months but the Court
based it in part on a motion that the government filed pursuant
to U.S.S.G. § 5K1.1 seeking a downwards departure from his
guidelines sentencing range because Robinson was cooperating
with the government in its investigation and prosecution of the
conspiracy involved in this case. Robinson has not appealed
from the sentence.

                               4
        On June 13, 2012, Kluger filed a timely appeal, raising
the following arguments. First, he challenges the District
Court‟s calculation of his sentencing guidelines range. Second,
he contends that the Court procedurally erred in imposing the
sentence on him by (1) improperly denying him an evidentiary
hearing prior to his sentencing; (2) failing to resolve his
objections to the presentence investigation report; and (3) not
ordering discovery of materials that the government turned over
to the probation department for use in preparing the presentence
report. Finally, he contends that the District Court imposed a
procedurally and substantively unreasonable sentence.2

                    II. BACKGROUND

        The insider-trading scheme began in the summer of 1994
and, as we have indicated, involved three individuals: Kluger,
Bauer, and Robinson. When the parties to the conspiracy
initiated their scheme, Kluger had finished his second year of
law school at New York University and was working as a
summer associate at the New York law firm of Cravath, Swaine

2
 Kluger also argues that if we remand the case for resentencing
we should direct that the case be reassigned from the original
judge to a different judge but inasmuch as we are affirming the
sentence the reassignment issue is moot and we do not further
discuss it. Significantly, though Kluger asks that this case be
reassigned on the remand he seeks he does not seek a new
sentencing on the ground that the judge was biased against him.

                               5
& Moore. Kluger knew Robinson from their prior employment
at a New York real estate company and Bauer knew Robinson
from their prior employment at a venture capital firm in New
York.3 Although the conspirators dispute whether Kluger first
approached Robinson, or vice versa, they agree that Kluger
served as the sole source of the inside information involved in
the conspiracy.

        Beginning as a summer associate and then continuing as
a full-time associate after law school, Kluger passed along
material, nonpublic information concerning mergers and
acquisitions to Robinson who then gave that information to
Bauer, who as a professional stock trader used it to execute
trades on behalf of the three conspirators.4 Robinson instructed
Bauer on how many shares to purchase for him and for Kluger,
intending to keep the purchases to a modest volume to avoid
drawing attention to the conspirators‟ activities. Nevertheless,

3
  In his sentencing memorandum in the District Court, Bauer
explained that he “met Matt [Kluger] only once long before the
conspiracy started, and recalls speaking with him on the
telephone only briefly on perhaps one occasion during the 17-
year period of the conspiracy.”
4
  The law firms employing Kluger gave him training concerning
inside trading and repeatedly required him to sign internal law
firm policy statements prohibiting him from engaging in such
trading. There is no suggestion in the record that any attorney or
employee of any of the firms that employed Kluger other than
Kluger himself was involved in the inside trading.

                                6
Bauer deviated from Robinson‟s instructions by trading in share
volumes far in excess of the number of shares that the three
conspirators agreed would be traded.5 This excess trading,
though originally greatly enhancing Bauer‟s trading profits,
likely was a catastrophic mistake as it well may have triggered
the investigation into the conspirators‟ activities. Neither Bauer
nor Robinson informed Kluger of the extent of Bauer‟s trading.
In executing his trades, Bauer followed the practice of
purchasing the shares based on Kluger‟s information before the
information became public and then selling the shares after the
announcement. Following successful trades, Bauer would make
withdrawals from multiple ATM machines and then give
Robinson cash, minus capital gains taxes, to cover the payments
to Robinson and Kluger.6

       The first phase of the scheme continued through 2002
and involved inside information related to approximately 20
corporate transactions resulting in profits of $13,026,904.
During that period, Kluger moved from one law firm to the next.
 Thus, following his employment at Cravath, Swaine & Moore,

5
  There is some dispute as to the existence and terms of the
agreement but on this appeal we accept Kluger‟s contention that
Bauer greatly exceeded the limitations on which the conspirators
agreed with respect to the number of shares that would be
traded.
6
  We are not suggesting that Kluger did not receive taxable
income on the money paid to him merely because Bauer may
have paid taxes on all of the conspirators‟ gains as that issue is
not before us.

                                7
Kluger obtained a position with Skadden, Arps, Slate, Meagher
& Flom which employed him for approximately three years in
its New York and Palo Alto offices. Thereafter Fried, Frank,
Harris, Shriver & Jacobson employed Kluger for approximately
one year in its New York office. In the late 1990s, the Securities
and Exchange Commission began investigating some of the
conspirators‟ trades. By 2002, the scheme went on hiatus while
Kluger worked for Sills, Cummis, Epstein & Gross and then
served as an in-house counsel for a corporation, two places of
employment at which Bauer did not gain information useful for
inside trading. The second phase of the scheme started when
Kluger joined the Washington, D.C. office of Wilson, Sonsini,
Goodrich & Rosati as a senior associate in December 2005 and
this phase continued throughout his tenure at that firm for more
than five years. Although in some cases the insider trading led
to losses, overall the insider-trading scheme made substantial
profits.7

       During the second phase of the insider-trading scheme,
Kluger provided inside information regarding 13 transactions.
Presentence Report (“PSR”) ¶ 49. Relying on that information,
Bauer wagered approximately $124 million through his trading
accounts and realized $34,465,343 in gross profits. Id. ¶ 98.
The insider-trading profits allowed Bauer to purchase a $6.65
million apartment in Manhattan and an $875,000 home in

7
  The presentence report describes Cravath, Swaine & Moore,
Skadden, Arps, Slate, Meagher & Flom, Fried, Frank, Harris,
Shriver & Jacobson, and Wilson, Sonsini, Goodrich & Rosati as
“four of the largest and most prominent mergers and acquisition
law firms in the United States.” PSR ¶ 13.

                                8
Florida. Id. ¶ 88. The conspirators took extra precautions
during the second phase of the scheme to avoid detection,
especially when they learned in or around 2007 that their trading
activities had come to the attention of civil regulators. Kluger,
for example, only misused information related to transactions on
which he was not working during his employment at Wilson,
Sonsini, Goodrich & Rosati. Moreover, the conspirators started
to use pay phones and “throwaway” prepaid cellular phones for
their communications and Robinson kept some of the illicit cash
in safe deposit boxes. In spite of the conspirators‟ steps to avoid
detection, their activities were uncovered and FBI and IRS
agents executed a search warrant at Robinson‟s home on March
8, 2011, in furtherance of the investigation. Id. ¶ 53. The agents
inquired about the suspicious trades in his and Bauer‟s accounts
as well as Robinson‟s “structuring” activities by making
deposits under the $10,000 mandatory reporting threshold.

        Following the execution of the warrant, Robinson called
Bauer and Kluger separately to inform them of the search and
ongoing investigation. In the following weeks, unbeknownst to
Bauer and Kluger, Robinson began cooperating with the
government and recording his separate phone conversations with
them. The incriminating conversations not only implicated the
parties based on their past conduct but also revealed their plans
to obstruct justice by destroying key evidence, such as cell
phones and computers, and by agreeing not to cooperate with
the government. A bizarre example of their attempts to obstruct
justice was Bauer‟s proposal that Robinson burn $175,000 in
cash obtained in the latest ATM withdrawals to eliminate
Bauer‟s fingerprints, or, alternatively, to run the cash through a
washing machine, a suggestion that gives a new and literal

                                9
meaning to the term “money laundering.”

        During this cover-up phase of the conspiracy, Kluger
emphasized that he was not going to cooperate with the
government because he knew he never would get a good deal
due to his role as the source of the inside information. On April
6, 2011, federal agents arrested Bauer and Kluger. Five days
later, federal agents arrested Robinson, who pled guilty that
same day.

                     III. JURISDICTION

      The District Court exercised jurisdiction pursuant to 18
U.S.C. § 3231. We have appellate jurisdiction pursuant to 18
U.S.C. § 3742(a)(1) and 28 U.S.C. § 1291.

                      IV. DISCUSSION

A. Sentencing

       1. Sentencing Guidelines Calculation

       On appeal, “[w]e review the District Court‟s
interpretation of the Sentencing Guidelines de novo, and
scrutinize any findings of fact for clear error.” United States v.
Aquino, 555 F.3d 124, 127 (3d Cir. 2009) (internal citations
omitted). But “[w]e review the District Court‟s application of
the Guidelines to facts for abuse of discretion.” United States v.

                               10
Tupone, 442 F.3d 145, 149 (3d Cir. 2006) (citation omitted); see
also Aquino, 555 F.3d at 127 n.5 (“[T]he appropriate standard
when reviewing a district court‟s application of law to fact is
due deference.”) (citation and internal quotation marks omitted).

       The first step of the three-step sentencing process
requires a district court to calculate a defendant‟s guidelines
sentencing range in the same way that it would have made its
calculations prior to the Supreme Court‟s decision in United
States v. Booker, 543 U.S. 220, 125 S.Ct. 738 (2005), in which
the Court determined that the guidelines would have only an
advisory status. See United States v. Gunter, 462 F.3d 237, 247
(3d Cir. 2006). Kluger argues that the District Court improperly
used U.S.S.G. § 2B1.4 (“Insider Trading”) exclusively for
calculating the gain attributable to him for the purposes of
sentencing, thereby ignoring U.S.S.G. § 1B1.3 (“Relevant
Conduct”). Under § 2B1.4, the District Court attributed all of
the scheme‟s monetary gain to Kluger even though his share of
the profits was far less than Bauer‟s share when Bauer was
trading on Kluger‟s information.8 Of course, the attribution of
gains to a defendant can be critical in a guidelines sentencing
range calculation for in general, within ranges of gains, the
larger the gain attributable to a defendant the higher his
sentencing range will be.

8
 The District Court also attributed Robinson‟s trading gains to
Kluger, but these gains were minimal in comparison to Bauer‟s
gains. The fact that profits are attributable to one conspirator in
guidelines calculations does not mean that the same gains cannot
be attributed to another conspirator as well.

                                11
        We interpret and apply the guidelines as written. See
United States v. Wong, 3 F.3d 667, 670 (3d Cir. 1993) (citation
omitted). Therefore, “[a]s with statutory language, the plain and
unambiguous language of the Sentencing Guidelines affords the
best recourse9 for their proper interpretation.” Id. (citations
omitted). The Supreme Court has explained “that commentary
in the Guidelines Manual that interprets or explains a guideline
is authoritative unless it violates the Constitution or a federal
statute, or is inconsistent with, or a plainly erroneous reading of,
that guideline.”10 Stinson v. United States, 508 U.S. 36, 38, 113
S.Ct. 1913, 1915 (1993). With those holdings in mind, we
examine the guidelines text and applicable commentary.11

9
  The word “recourse” appears in the original opinion. We
believe that the Court may have intended to say “resource.”
10
  In Stinson v. United States the Supreme Court explained that
the commentary not only clarifies the guidelines but also
“provides concrete guidance as to how even unambiguous
guidelines are to be applied in practice.” 508 U.S. 36, 44, 113
S.Ct. 1913, 1918 (1993). Though the guidelines are no longer
mandatory, we still look to the commentary when we calculate
the guideline sentence as we would have pre-Booker.
11
  The District Court used the November 1, 2011 edition of the
Guidelines Manual in Kluger‟s sentencing as that edition was in
effect at the time of the sentencing and there were no ex-post
facto concerns in this case by reason of amendment of the
guidelines after Kluger committed his offenses barring the use
of that edition. Therefore, the Supreme Court‟s recent holding

                                12
      As applicable in this case the insider-trading guideline,
U.S.S.G. § 2B1.4, states:

       (a) Base Offense Level: 8

       (b) Specific Offense Characteristics

          (1) If the gain resulting from the offense exceeded
          $5,000, increase by the number of levels from the

in Peugh v. United States, 569 U.S. ____, 133 S.Ct. 2072
(2013), prohibiting as a violation of the Constitution‟s ex post
facto clause the sentencing of a defendant under a guideline
promulgated after the commission of the crime and
recommending a higher sentencing range than the applicable
guideline at the time of the crime, is inapplicable. Nonetheless,
we note that following the passage of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Pub. L. No. 111-
203, the guidelines were amended to provide: “If the offense
involved an organized scheme to engage in insider trading and
the offense level determined above is less than level 14, increase
to level 14.” U.S.S.G. § 2B1.4(b)(2). This guideline sentencing
range increase reflects a continued push to ratchet up the
penalties for insider trading. The application note applying
subsection (b)(2) states: “[A]n „organized scheme to engage in
insider trading‟ means a scheme to engage in insider trading that
involves considered, calculated, systematic, or repeated efforts
to obtain and trade on inside information, as distinguished from
fortuitous or opportunistic instances of insider trading.”
U.S.S.G. § 2B1.4 cmt. n.1.

                               13
          table in § 2B1.1 (Theft, Property Destruction, and
          Fraud) corresponding to that amount.

          ...

       The commentary‟s application note 2 reads:

       Application of § 3B1.3.--Section 3B1.3 (Abuse of
       Position of Trust or Use of Special Skill) should be
       applied if the defendant occupied and abused a position
       of special trust. Examples might include . . . an attorney
       who misused information regarding a planned but
       unannounced takeover attempt.

U.S.S.G. § 2B1.4 cmt. n.2.

       The commentary‟s background reads:

       . . . 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.

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

      The government relies on the commentary‟s plain
language to support its argument that in a guidelines calculation
Bauer‟s gains even when not shared with Kluger are attributable
to Kluger. In this regard it is significant that Kluger does not

                                 14
dispute either his role as the source of the information on which
Bauer traded or the amount of Bauer‟s gains based on that
information. Rather, he counters that there is no support in the §
2B1.4 commentary for a conclusion that the “gain” calculation is
exempted from the application of the reasonable foreseeability
test under § 1B1.3(a)(1)(B) and that the District Court should
have applied § 1B1.3(a)(1)(B) to lessen the gains of the
conspiracy attributable to Kluger.

       U.S.S.G. § 1B1.3 states:

       (a) Chapters Two (Offense Conduct) and Three
       (Adjustments). 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

                  (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,

                               15
                  that occurred during the commission of the
                  offense of conviction, in preparation for that
                  offense, or in the course of attempting to
                  avoid detection or responsibility for that
                  offense; . . . .

U.S.S.G. § 1B1.3 (emphasis added). According to Kluger, the §
2B1.4 commentary dealing with insider trading merely provides
an overview of the importance of gain in the context of insider
trading; it does not trigger the “[u]nless otherwise specified”
exception to the application of § 1B1.3, a guidelines section that
standing alone arguably could have resulted in Kluger having a
lower offense level and thus a lower sentencing range than the
range that the District Court applied in his sentencing.12
Therefore, Kluger argues that the Court erred in not holding a
presentence evidentiary hearing to determine whether he
reasonably could have foreseen that Bauer would engage in his
outsized trades inasmuch as he did not agree to the scale of
those trades.

       In United States v. Cespedes we explained that “[b]y
including the phrase „unless otherwise specified,‟ the relevant
conduct provision admits of exceptions to application of §
1B1.3(a)(1)(B)‟s reasonable foreseeability test in certain
instances.” 663 F.3d 685, 689 (3d Cir. 2011). Cespedes, a case
involving a prosecution following a three-man armed bank

12
  As we explain below even if we applied the foreseeability test
as Kluger urges our result might be the same as that which we
reach.

                               16
robbery, dealt with the application of an enhancement in
U.S.S.G. § 3C1.2 for “recklessly creating a substantial risk of
death or serious bodily injury to another person in the course of
fleeing from a law enforcement officer.” 663 F.3d at 686-87.
Cespedes and Grant, two of the three conspirators, who were
armed entered a bank while the third conspirator, Whitehurst,
waited outside in a getaway car. Cespedes flashed his weapon,
and he and Grant removed the cash stolen in the robbery before
exiting the bank and jumping into the car. After Whitehurst
drove from the bank the police attempted to make a traffic stop
of the getaway car and a high-speed chase through residential
neighborhoods ensued. At some point, Cespedes and Grant
jumped out of the car and fled on foot. Whitehurst, however,
continued on driving recklessly, nearly striking pedestrians
before eventually hitting a parked minivan and then colliding
with a police vehicle. See id. at 687.

        The applicable commentary to the sentencing
enhancement explained that “the defendant is accountable for
the defendant‟s own conduct and for conduct that the defendant
aided or abetted, counseled, commanded, induced, procured, or
willfully caused.” Id. at 689 (citing U.S.S.G. § 3C1.2 cmt. n.5).
 In overturning the district court‟s application of the
enhancement, we explained that by “specifically describing”
when the enhancement was applicable the guidelines based the
enhancement on “something other than reasonable
foreseeability,” and therefore created an exception to the
application of § 1B1.3(a)(1)(B)‟s reasonable foreseeability test.
Accordingly, the application of a reasonable foreseeability test
impermissibly expanded the scope of the criminal acts
attributable to Cespedes in direct contravention of the

                               17
commentary to the enhancement guideline.

        Kluger‟s case differs from Cespedes‟ because the
application of the reasonable foreseeability test arguably
impermissibly would constrict rather than expand Kluger‟s
responsibility in possible contravention of the commentary to
the insider-trading guideline. But the key is not the distinction
between expansion and constriction of responsibility but rather
the application of the relevant commentary. The plain language
of the commentary‟s background to § 2B1.4 unequivocally
attributes all of Bauer‟s gains to Kluger because Bauer was a
“person[] acting in concert with the defendant,” as well as one
“to whom the defendant provided inside information.” U.S.S.G.
§ 2B1.4 cmt. background. Therefore, the insider-trading
guideline falls under the “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 and thus of the guidelines range in imposing
a sentence on Kluger.13

13
   We are not suggesting that if we applied a reasonable
foreseeability test to Kluger‟s conduct under U.S.S.G. §
1B1.3(a)(1)(B), we would not hold him responsible for the
profits that Bauer obtained. Rather, we do not pass on this
question. Nevertheless, we observe that it is undisputed that
Kluger passed inside information to Robinson with the intent
that the information would reach Bauer who Kluger knew was a
securities trader in order for Bauer to place illicit trades. The
District Court believed based on the facts in the record,
including the logistics of the scheme and the taped conversations

                               18
        The accompanying guideline to § 2B1.4, § 2B1.1
(“Larceny, Embezzlement, and Other Forms of Theft”) supports
our result. Section 2B1.1 includes a glossary of definitions one
of which, “Actual Loss,” “means the reasonably foreseeable
pecuniary harm that resulted from the offense” and “Reasonably
Foreseeable Pecuniary Harm,” which “means pecuniary harm
that the defendant knew or, under the circumstances, reasonably
should have known, was a potential result of the offense.”
U.S.S.G. § 2B1.1 cmt. n.3. The presence of this foreseeability
language in § 2B1.1 demonstrates that the Sentencing
Commission could have inserted an explicit foreseeability
requirement in § 2B1.4 if it had wanted to do so.14 In the

prior to Kluger‟s arrest, that it was reasonably foreseeable to
him that Bauer would trade above and beyond any initially
agreed on limit, assuming that an agreement limiting the number
of shares to be traded was in place.
14
   If Kluger had engaged in the commission of financial fraud
other than insider trading, and the District Court had used §
2B1.1 instead of § 2B1.4 in making its calculations, the § 1B1.3
reasonable foreseeability provision might have been applicable
in his sentencing. In a recent decision by the Court of Appeals
for the Tenth Circuit involving a pump-and-dump scheme, the
court affirmed the attribution of the conspirators‟ profits after
holding that the profits were reasonably foreseeable to the
defendant. See United States v. Gordon, 710 F.3d 1124, 1164
(10th Cir. 2013) (“As long as the gain of a co-conspirator is
reasonably foreseeable, it can be attributed to a defendant.”)
(citation omitted). We, however, do not make a determination
on that point because we are not dealing with a situation parallel

                               19
circumstances we should not look beyond the plain language of
§ 2B1.4 and read a foreseeability test into § 2B1.4.

        In reaching our result, we are aware of certain widely
publicized recent cases from other courts dealing with insider-
trading convictions that the parties on this appeal discuss in their
briefs. In United States v. Gupta the district court strictly relied
on § 2B1.4 and its commentary for calculating gain in an
insider-trading case even though the court believed that the
guideline „“is not a model of clarity.”‟ 904 F. Supp. 2d 349, 352
(S.D.N.Y. 2012) (citing United States v. Rajaratnam, No. 09 Cr.
1184, 2012 WL 362031, at *14 (S.D.N.Y. Jan. 31, 2012), aff‟d,
No. 11-4416-cr, 2013 WL 3155848, ____ F.3d ____ (2d Cir.
June 24, 2013)).15 In that case Rajat Gupta, a former Goldman

to that in Gordon.
15
   Our internal operating procedures provide that our not
precedential opinions are not binding on panels in later cases in
this Court. See Chehazeh v. Attorney Gen., 666 F.3d 118, 127
n.12 (3d Cir. 2012) (citing Internal Operating Procedures 5.7 (3d
Cir. 2010)). Consequently, we surely are not bound by
unpublished district court opinions from courts in other circuits.
 But the parties have discussed Gupta and Rajaratnam and we do
not think that we simply should ignore these cases.
Furthermore, we find these insider-trading sentencing decisions
from the Southern District of New York informative and
persuasive and consider them in our discussion of the
interpretation of the sentencing guidelines even though the
parties only cite to them in their discussion of the “disparity” of
defendants‟ sentences in insider-trading cases and the

                                20
Sachs director, was convicted of one count of conspiracy and
three counts of securities fraud for providing material, nonpublic
information to an investor, Raj Rajaratnam, the founder and
head of the hedge fund Galleon Group. The jury found that
Gupta tipped Rajaratnam ahead of Warren Buffett‟s $5 billion
infusion into Goldman Sachs and tipped him again in advance of
Goldman‟s unexpected announcement of quarterly losses in
2008. Galleon‟s trades based on those tips led to an illicit
“gain” of $5,032,195. See Gupta, 904 F. Supp. 2d at 353. In
calculating Gupta‟s guideline range, the district court did not
assess the extent to which the $5,032,195 figure was foreseeable
to Gupta.16 In fact, the district court did not make any reference
to foreseeability under § 1B1.3 even though Gupta, like Kluger,
was a tipper.17

application of the sentencing considerations set forth in 18
U.S.C. § 3553(a).
16
   Although the district court in Gupta granted a § 3553(a)
variance based in part on the fact that Gupta did not derive any
monetary gain from the information that he provided, the
variance was an individualized decision that has no bearing on
the underlying guidelines calculation for other defendants.
17
  In United States v. Royer the Court of Appeals for the Second
Circuit applied a reasonable foreseeability test to a tipper in an
insider-trading case. 549 F.3d 886 (2d Cir. 2008). The appeals
court affirmed the district court‟s sentence predicated in part on
the attribution to the appellant tipper of the acts of another
defendant, the tippee, on the grounds “that the nature of [the

                               21
       In Rajaratnam, the district court also relied on the
commentary to U.S.S.G. § 2B1.4 to calculate gain without
addressing the foreseeability issue addressed in § 1B1.3. See
Rajaratnam, 2012 WL 362031.18 A jury convicted Rajaratnam

tippee‟s] enterprise was evident to [the tipper] from his earliest
involvement in it.” Id. at 905. Yet in Royer the gain calculation
included trades stemming from securities fraud counts of which
the tipper and tippee were acquitted. And when the tippee
became the tipper by providing insider information that he
initially received to paying subscribers via his website, he was
held responsible for their gains without any reference to
reasonable foreseeability. The court included the subscribers‟
trades in its calculation based on § 2B1.4‟s background
commentary. See id. at 904 („“Because the victims [of insider
trading] 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.”‟) (alteration and emphasis added in original) (citing
U.S.S.G. § 2B1.4 cmt. background).
18
  We reiterate that unpublished opinions are not binding on this
Court, but we find the opinions we cite to be persuasive in our
analysis in this case. Furthermore, it is certainly appropriate to
cite them in our disparity discussion as Kluger advances them in
support of his appeal. We also are aware that both Gupta and
Rajaratnam have been appealed and that the Court of Appeals
for the Second Circuit has affirmed the conviction in
Rajaratnam without addressing sentencing issues as the

                               22
on 14 counts of insider-trading crimes involving trades by
Galleon. Rajaratnam used inside information gathered from a
number of sources to execute trades in publicly traded
companies including Intel, Google, and Goldman Sachs. As the
tippee, Rajaratnam was not in a position parallel to that of
Kluger. Moreover, Rajaratnam occupied an unusual position as
both a Galleon partner entitled to management fees and an
investor entitled to a percentage of the gains. Nonetheless,
without any reference to foreseeability, the court explained in its
detailed analysis of U.S.S.G. § 2B1.4 that the correct
interpretation of the background commentary “include[s] gains
from trading by „persons . . . to whom the defendant provided
inside information‟ and thereby hold[s] tippers responsible for
gains by their tippees.” Id. at *15 (citing U.S.S.G. § 2B1.4 cmt.
background).

      We agree with Rajaratnam and hold that the plain
language of the background commentary to § 2B1.4 clearly
indicates that Kluger can be held responsible for the full extent
of Bauer‟s gains. Bauer is explicitly an individual “to whom the
defendant provided inside information.”19 U.S.S.G. § 2B1.4

appellant in that case did not challenge his sentence on the
appeal.
19
   We are not concerned with the fact that Kluger directly
provided the information to Robinson, who then provided the
information to Bauer. Kluger intended Bauer to be the ultimate
tippee because Kluger knew that Robinson would not exercise
the vast majority of the trades on behalf of the conspirators.

                                23
cmt. background. Therefore, Bauer‟s gains should be attributed
to Kluger in their entirety, and the District Court needed to go
no further in its calculations of the gain attributable to Kluger
under § 2B1.4.20

        Finally with respect to guidelines calculations, we note
that we do not share the policy concerns that Kluger advances
that a “sentence [of] an individual for unforeseeable conduct by
a co-conspirator [] accomplish[es] no recognized penological
aim.” Appellant‟s br. at 30. By punishing the conspirator who
is the source of the information for all gains made by his co-
conspirators, we are reinforcing the deterrence message sent to
would-be tippers by many courts. Moreover, we are sending a
clear warning to individuals, such as Kluger, who, in an attempt
to limit their responsibility and the extent of their potential
sentencing exposure allege that they had agreements with their
co-conspirators to cap the illicit gains. Would-be tippers will
know that they cannot be certain that they will restrict their
responsibility by coming to limiting agreements with their co-
conspirators prior to commission of their offenses and will come
to realize the inherent risk in leaking inside information. We
also point out that both what we recognize was a long sentence
that the Court imposed on Kluger and this opinion are likely to
come to the attention of would-be insider traders who may be
better educated and informed than persons engaging in other
criminal activity, particularly inasmuch as insider-trading cases
seem to be well publicized even in the general media.

20
  We also note that we are not faced with and therefore leave to
another day whether this rationale applies outside the criminal
context.

                               24
       2. Hearing, Objections and Discovery

        When reviewing a district court‟s interpretation of the
sentencing guidelines we exercise plenary review, but when
reviewing a district court‟s application of the guidelines to the
facts, we utilize an abuse of discretion deferential standard of
review. See Aquino, 555 F.3d at 127 n.5. Kluger argues that
the District Court denied him a presentence evidentiary hearing
at which he could have addressed the foreseeability issue with
respect to the scope of the agreement among the conspirators
through direct testimony and cross-examination.21               At
sentencing, Kluger explained that he did not stipulate to the total
amount of “gain” because he expected to address that issue at
the hearing that he contemplated the Court would conduct prior
to his sentencing. Kluger also argues that the Court failed to
resolve his objections to the presentence report and also erred in
not ordering discovery regarding information the government
provided to the probation officer. In particular, Kluger objected
to the presentence report‟s characterization of the agreement
among the conspirators and the portrayal of Kluger as the
initiator of the conspiracy.

       Under U.S.S.G. § 6A1.3(a) (emphasis added):

21
  We review a refusal to grant such an evidentiary hearing for
abuse of discretion. See United States v. Cantero, 995 F.2d
1407, 1412 (7th Cir. 1993) (citations omitted). The government
put Robinson, the “middleman,” on notice that he might need to
testify at Kluger‟s sentencing hearing, but the District Court
determined that this testimony was not necessary because the
Court did not conduct an evidentiary hearing.

                                25
       When any factor important to the sentencing
       determination is reasonably in dispute, the parties shall
       be given an adequate opportunity to present information
       to the court regarding that factor. In resolving any
       dispute concerning a factor important to the sentencing
       determination, the court may consider relevant
       information without regard to its admissibility under the
       rules of evidence applicable at trial, provided that the
       information has sufficient indicia of reliability to support
       its probable accuracy.

U.S.S.G. § 6A1.3(b) provides that, “[t]he court shall resolve
disputed sentencing factors at a sentencing hearing in
accordance with Rule 32(i), Fed. R. Crim. P.” Rule 32(i)
(emphasis added) provides that at sentencing, the court:

       (A) must verify that the defendant and the defendant‟s
       attorney have read and discussed the presentence report
       and any addendum to the report;

       ...

       (C) must allow the parties‟ attorneys to comment on the
       probation officer‟s determinations and other matters
       relating to an appropriate sentence; and

       ...

    (2) The court may permit the parties to introduce evidence on
the objections. . . .

   (3) At sentencing, the court:

                               26
       ...

       (B) 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 . . . .

               a. Evidentiary Hearing

       The District Court held an extensive sentencing hearing
for Kluger in which the parties addressed the Court. The
sentencing guidelines and Federal Rules of Criminal Procedure
do not require that a district court conduct an evidentiary hearing
in addition to a sentencing hearing at which the parties can be
heard. Thus, “[a]n evidentiary hearing need not be afforded on
demand because there is no „right‟ to a hearing.” United States
v. Cantero, 995 F.2d 1407, 1413 (7th Cir. 1993) (citations
omitted); see also United States v. Real-Hernandez, 90 F.3d 356,
362 (9th Cir. 1996) (“There is no general right to an evidentiary
hearing at sentencing, and a district court has discretion to
determine whether to hold such a hearing.”) (internal citations
omitted). In Cantero the Court of Appeals for the Seventh
Circuit held that the district court did not abuse its discretion in
denying the defendant in a drug conspiracy case an evidentiary
hearing to contest the sentencing enhancement for his
supervisory role in the conspiracy, even though the defendant
argued that the determination of his role in the conspiracy raised
a question of fact and that he needed to cross-examine his co-
conspirators so that the court could determine how to
characterize his role. In this regard, the defendant was given a

                                27
copy of the presentence report in advance of sentencing and the
government and he submitted written memoranda on the issue.
See Cantero, 995 F.2d at 1413. The district court, after
considering the materials submitted on the issue, held that the
defendant was not a leader or organizer of the criminal activity
but rather was a manager or supervisor of the activity.

        In United States v. Collado, a case involving two brothers
serving as heroin suppliers in a broader drug conspiracy, we
remanded the case for resentencing because the district court
failed to make any factual findings beyond those in the
presentence report concerning the scope of their involvement.
975 F.2d 985 (3d Cir. 1992). We emphasized that when a
district court is applying § 1B1.3 “a searching and
individualized inquiry into the circumstances surrounding each
defendant‟s involvement in the conspiracy is critical to ensure
that the defendant‟s sentence accurately reflects his or her role.”
 Id. at 995. But in Collado the record was unclear as to when
the brothers initially became involved in the conspiracy, and
therefore the record did not clearly establish the date after which
the brothers could be held accountable for the proceeds of the
conspiracy. See id. at 996. There is, however, no uncertainty as
to the time during which Kluger participated in the conspiracy in
this case because the conspiracy could not have been carried out
prior to his involvement inasmuch as he served as the source of
the information that made the execution of the scheme possible.

        In United States v. Rennert, building on Collado, we
clarified that “[a]lthough we required individualized inquiry [in
Collado], we did not impose an immutable requirement that the
district court hold extensive hearings to make explicit,

                                28
particularized findings as to the exact date on which each
defendant committed to the conspiracy or the precise contours of
each conspirator‟s agreement.” 374 F.3d 206, 214 (3d Cir.
2004), vacated in part on other grounds, Miller v. United States,
544 U.S. 958, 125 S.Ct. 1744 (2005). Consequently, we agree
with the Court of Appeals for the Seventh Circuit “that § 6A1.3
of the Guidelines requires the district court to provide a
procedure — but not necessarily an evidentiary hearing — in
which the parties may argue contested sentencing issues.”
Cantero, 995 F.2d at 1413 (citation omitted); see also Fed. R.
Crim. P. 32(i)(2) (“The court may permit the parties to introduce
evidence on the objections.”) (emphasis added). Here, the
extensive sentencing hearing before the District Court gave
Kluger a sufficient opportunity to present his case.

       In holding Kluger responsible for the profits from the
insider trading under the plain language of § 2B1.4 in which
foreseeability as Kluger raises the issue in this case is not an
issue, we agree with the District Court that there was no need
for an evidentiary hearing. Kluger does not dispute the total
amount gained by Bauer on which the District Court made its
calculations and he does not deny that his tips to Bauer via
Robinson made the gains possible. No matter what the terms of
the agreement among the conspirators, those terms would not
have altered the fact that Kluger provided the information that
reached Bauer via Robinson and made it possible for Bauer to
make substantial gains by trading on that information.
Furthermore, even if the foreseeability to Kluger of the extent of
Bauer‟s trades had been an issue in Kluger‟s sentencing, as he
claims it should have been, as the District Court explained,
Kluger could not have “made one of his regular trips north to

                               29
pick up his cash proceeds, [and then] return[ed] back resting
comfortably in the idea that nobody else had a dollar more than
he did of gain.” App. at 63.

              b. Objections

        In a May 25, 2012 letter to the District Court, Kluger
complained that the presentence report did not adequately
address his objections. As noted above, Kluger objected to the
characterization of the scheme, which he alleged was based on
an underlying agreement regarding the division and targeted
range of profits, thereby altering the calculation of the gains
attributable to him and explaining the absence of a loss
stipulation in the plea agreement. Kluger also objected to the
presentence report‟s description of him as the initiator of the
scheme, a characterization that he would have attempted to rebut
in testimony at a presentence evidentiary hearing. The
presentence report read:

       In the summer of 1994, Kluger, who was then in
       law school at NYU and working as a summer
       associate at Cravath [,Swaine & Moore],
       contacted Robinson and told him „I‟ve got
       something,‟ meaning that he had access to inside
       information through his employment at the law
       firm. Kluger explained that he could learn of
       merger activity before the information was public
       through his work at the firm. At Kluger‟s request,
       Robinson agreed to help find individuals willing
       to buy and sell stocks based on the inside
       information Kluger provided.           Robinson

                              30
      approached Bauer, a professional stock trader and
      Robinson‟s friend, who agreed to trade based on
      the inside information provided by Kluger.

PSR ¶ 34. Kluger, however, proposed the following paragraph:

      Kluger and Robinson remained friends after their
      brief stint working together at the Manhattan real
      estate company, REQuest, and would speak on
      the phone from time to time. In the summer of
      1994, Kluger was in law school at NYU and
      working as a summer associate at Cravath,
      Swaine & Moore.           In several telephone
      conversations in which Kluger and Robinson
      discussed each other‟s work and current lives,
      Robinson became aware that Kluger was working
      on potentially high profile [merger and
      acquisition] deals and that he was learning of
      merger activity before the information became
      public through his work at the firm. Robinson
      then told Kluger about his friend Garrett Bauer, a
      professional stock trader and Robinson‟s friend.
      Robinson approached Bauer who agreed to trade
      based on the inside information provided by
      Kluger. Kluger, Bauer and Robinson agreed that
      profits from any inside information provided by
      Kluger would be split equally among the three of
      them. From the beginning of the scheme, Bauer
      did not honor his agreement to split profits
      equally among the three participants and, instead,
      kept the majority of the profits for himself.

                             31
       Kluger was unaware that Bauer was trading over
       and above the amounts discussed between Kluger
       and Robinson.

PSR ¶ 57.

       The Probation Department, however, is not required to
resolve all objections. Following Fed. R. Crim. P. 32(g), the
probation officer “submit[ted] to the court and to the parties the
presentence report and an addendum containing any unresolved
objections, the grounds for those objections, and the probation
officer‟s comments on them.” Fed. R. Crim. P. 32(g).

       In considering the presentence report the District Court
complied with the applicable federal rules of criminal procedure.
 Fed. R. Crim. P. 32(i)(3)(B) provides that the sentencing 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 . . . .” The District Court made its disposition with
respect to the dispute concerning the existence of a limiting
agreement among the conspirators by refusing to grant a hearing
on the grounds that Kluger could not prove anything at the
hearing that would impact on the Court‟s determination of his
sentence. The Court reached its conclusion as to how to proceed
by relying on the plain language of § 2B1.4 and by taking into
account its concern over the potential for unreliable testimony
regarding the agreement. At the sentencing hearing, the Court
explained that it was “fully satisfied that the background note to
the insider trading . . . guideline[] fully covers Mr. Bauer‟s

                               32
activities and Mr. Kluger‟s activities. And that the gain
attributable to Bauer‟s activities is attributable to Kluger in
terms of the exposure to the guideline,” regardless of the
existence of an agreement. App. at 63.

        Clearly, in Kluger‟s proposed changes to the presentence
report quoted above he attempts to describe his role in the
scheme in more benign terms than the report described his role.
Thus, Kluger suggests that the presentence report should have
recited that “Robinson became aware,” of Kluger‟s access to
inside information whereas the report states that Kluger directly
contacted Robinson and informed him that he had access to
inside information. The presentence report also states that
Kluger asked Robinson to locate an individual capable of
executing the trades on their behalf whereas Kluger claims that
Robinson told him about Bauer and approached Bauer on his
own.

        Kluger concedes that he did not object to the presentence
report at sentencing but attributes his failure to object to his
expectation that the Court would resolve factual disputes at the
evidentiary hearing that he contemplated that the Court would
hold before imposing sentence. Kluger argues that even though
the District Court did not directly address his alleged initiating
role in the scheme, the Court could not have failed to consider it.
 Kluger, however, is in no position to make assumptions as to
what the District Court did or did not take into consideration in
rendering its sentence. Ultimately, Kluger was the source of the
information that Bauer used to make his trades; the
identification of the originator of the underlying scheme was of
minimal significance in view of the circumstance that Kluger

                                33
was a full participant in the conspiracy, and therefore an inquiry
into the originator of the scheme did not merit an individualized
sentencing hearing.

              c. Discovery

        Kluger claims that there are materials, including recorded
conversations and emails, that would prove that there was an
agreement among the three conspirators regarding the limits of
the insider-trading scheme.22 He maintains that the government
violated his due process rights by not supplying to him all of the
materials that it provided to the probation office which he argues
functions as “an independent arm of the court,” not as “an arm
of the government.” Appellant‟s br. at 57. But Fed. R. Crim. P.
32, which deals with presentence reports does not provide for
such broad discovery with respect to presentence materials.
Rather, Rule 32(e)(2), requires that the probation officer give
the report itself to the defendant, the defendant‟s counsel, and a
government attorney at least 35 days prior to sentencing unless
the defendant waives the time requirement. Rule 32(f) provides
that the parties have 14 days to object in writing and to provide

22
  In particular, Kluger maintains that he should have received
tapes/transcripts of Robinson‟s post-arrest conversations with
Bauer. We believe he is referring to the conversations between
Robinson and Bauer following Robinson‟s decision to cooperate
with the government. The presentence report provides a
detailed overview of those conversations. We are not aware of
any communications between Bauer and Robinson after their
arrests on the charges involved in this case.

                               34
those objections to the probation officer and to the opposing
party. The probation officer then may meet with the parties to
review their objections. See Rule 32(f)(3). At least seven days
before sentencing, the probation officer must provide the report
and related objections to the court and parties.23 See Rule 32(g).
 Thus, Rule 32 did not require that Kluger be given the
discovery that he sought.

        In any event, even if the rules provided that such
discovery materials should have been supplied, Kluger does
nothing more than speculate with respect to the existence of
such materials, especially in the absence of any indication that
the government failed to comply with the rule‟s disclosure
requirements that should be made. The government counters
that it already disclosed all of the information, such as the
transcripts and copies of the calls that Robinson covertly
recorded, and, at sentencing, the District Court accepted the

23
  The only additional disclosure occurs at sentencing when the
court “must give to the defendant and an attorney for the
government a written summary of--or summarize in camera--any
information excluded from the presentence report under Rule
32(d)(3) on which the court will rely in sentencing, and give
them a reasonable opportunity to comment on that information.”
 Fed. R. Crim. P. 32(i). Rule 32(d)(3) requires the presentence
report to exclude: “(A) any diagnoses that, if disclosed, might
seriously disrupt a rehabilitation program; (B) any sources of
information obtained upon a promise of confidentiality; and (C)
any other information that, if disclosed, might result in physical
or other harm to the defendant or others.”

                               35
government‟s assertion.24

       3. Reasonableness

       We review the procedural and substantive reasonableness
of the sentence for abuse of discretion. See United States v.
Friedman, 658 F.3d 342, 360 (3d Cir. 2011) (citation omitted).
“At both [the procedural and substantive] stages of our review,
the party challenging the sentence has the burden of
demonstrating unreasonableness.” United States v. Tomko, 562
F.3d 558, 567 (3d Cir. 2009) (en banc) (citation omitted)).

              a. Procedural Reasonableness

       In the wake of United States v. Booker, 543 U.S. 220,
125 S.Ct. 738, we have instructed district courts to adhere to a
three-step sentencing process. See Gunter, 462 F.3d at 247.
First, the district “[c]ourts must continue to calculate a

24
   The government indicates in its brief that the only information
that it provided to the probation office that it did not provide to
Kluger were copies of his personnel files from his employment
at the law firms where he obtained inside information. These
files provided the support for the parts of the presentence report
outlining the dates of his employment, his salary, and the
training he received. But the government contends that Kluger
had independent access to these files. Moreover, with or
without such access to the files Kluger surely had the
information that the files contained with respect to his salary,
training, and dates of employment and he knew that the firms
gave him instructions with respect to insider trading.

                                36
defendant‟s Guidelines sentence precisely as they would have
before Booker.” United States v. Brown, 578 F.3d 221, 225 (3d
Cir. 2009) (footnote, internal quotation marks, and citations
omitted). Second, “they must formally rule on the motions of
both parties and state on the record whether they are granting a
departure and how that departure affects the Guidelines
calculation, and take into account our Circuit‟s pre-Booker case
law, which continues to have advisory force.” Id. (internal
quotation marks and citations omitted). Third, the district courts
“are to exercise their discretion by considering the relevant §
3553(a) factors . . . in setting the sentence they impose
regardless whether it varies from the sentence calculated under
the Guidelines.” Id. (internal quotation marks and citations
omitted). In order to satisfy step three, “[t]he record must
disclose meaningful consideration of the relevant statutory
factors and the exercise of independent judgment, based on a
weighing of the relevant factors, in arriving at a final sentence.”
 United States v. Grier, 475 F.3d 556, 571-72 (3d Cir. 2007)
(citation omitted). In accordance with Gunter, the District Court
calculated that Kluger had an adjusted offense level of 33 and a
sentencing range of 135-168 months. After reviewing the
applicable § 3553(a) factors, the District Court sentenced Kluger
to a custodial term of 144 months, in the middle of his
guidelines range.

       We focus our review on Kluger‟s challenge to the District
Court‟s application of step three of the sentencing process.
Under 18 U.S.C. § 3553(a), the district court should impose a
sentence that is “sufficient, but not greater than necessary” to
comply with the purposes discussed in the second criterion
below. In particular, the court should consider:

                                37
(1) the nature and circumstances of the offense and the
history and characteristics of the defendant;

(2) the need for the sentence imposed--

   (A) to reflect the seriousness of the offense, to
   promote respect for the law, and to provide just
   punishment for the offense;

   (B) to afford adequate deterrence to criminal conduct;

   (C) to protect the public from further crimes of the
   defendant; and

   (D) to provide the defendant with needed educational
   or vocational training, medical care, or other
   correctional treatment in the most effective manner;

         (3) the kinds of sentences available;

         (4) the kinds of sentence and the sentencing range
            established for--

   (A) the applicable category of offense committed by
   the applicable category of defendant as set forth in
   the guidelines--

   ...

         (5) any pertinent policy statement--

                (A) issued by the Sentencing Commission

                         38
                      ...

       (6) the need to avoid unwarranted sentence disparities
       among defendants with similar records who have been
       found guilty of similar conduct; and

       (7) the need to provide restitution to any victims of the
       offense.

       The sentencing court “meaningful[ly] consider[s]” the
factors by “acknowledg[ing] and respond[ing] to any properly
presented sentencing argument which has colorable legal merit
and a factual basis.” United States v. Begin, 696 F.3d 405, 411
(3d Cir. 2012) (internal quotation marks and citations omitted).
Yet the court does not need to “discuss and make findings as to
each of the § 3553(a) factors if the record makes clear the court
took the factors into account in sentencing.” United States v.
Jackson, 467 F.3d 834, 841 (3d Cir. 2006) (internal quotation
marks and citations omitted). After considering the factors, the
District Court imposed a custodial sentence within the
guidelines sentencing range of 144 months on Kluger, which, as
we have indicated, was the longest insider-trading sentence in
history. But as we noted in Cooper, „“reasonableness is a range,
not a point.”‟ United States v. Cooper, 437 F.3d 324, 332 n.11
(3d Cir. 2006) (citation omitted), abrogated on other grounds by
Kimbrough v. United States, 552 U.S. 85, 128 S.Ct. 558 (2007).

       Kluger argues that the District Court focused on “the
seriousness of the offense” (§ 3553(a)(2)(A)) and on
“afford[ing] adequate deterrence” (§ 3553(a)(2)(B)) to the
exclusion of other factors, such as the “nature and circumstances

                               39
of the offense and the history and characteristics of the
defendant” (§ 3553(a)(1)). According to Kluger, “the judge
essentially did no more than mechanically recite the statutory
words, rather than applying them to the defendant at hand.”
Appellant‟s br. at 41-42 (internal citation omitted). The Court,
however, engaged in a thorough discussion of the
“circumstances of the offense,” such as the 17-year duration of
the conspiracy and the fact that the conspirators continued the
scheme even after learning of investigations by regulators on
two separate occasions.25 The Court, which has the discretion to
determine the extent to which each factor merits discussion, also
addressed “the history and characteristics of the defendant,”
such as Kluger‟s loving and supportive family, privileged
childhood, and the ability of the Bureau of Prisons to manage
his poor health during his incarceration.26 See United States v.
King, 604 F.3d 125, 144 (3d Cir. 2010) (citation omitted).

        Kluger focuses his appeal on what he perceives was the
vast disparity between his sentence and that of his co-
conspirator Bauer as well as the sentences of other defendants
convicted of insider trading throughout the country, particularly
in the Southern District of New York, quite naturally the venue

25
  Although the District Court did not directly discuss the need
to protect the public from Kluger, it addressed the harmful
impact of insider trading on the broader public.
26
  Kluger also presented to the District Court that he is gay but
separated from his former partner and that he and his former
partner care for their three children including one with an autism
spectrum disorder.

                               40
for numerous insider-trader prosecutions. Under § 3553(a)(6), a
sentencing judge considers “the need to avoid unwarranted
sentence disparities among defendants with similar records who
have been found guilty of similar conduct.” Courts apply §
3553(a)(6) to compare sentences between co-defendants or
among defendants in separate cases, as long as the “defendants
are similarly situated.” King, 604 F.3d at 145 (citations
omitted). Section 3553(a) “does not require district courts to
consider sentencing disparity among co-defendants,” but “it also
does not prohibit them from doing so.” United States v. Parker,
462 F.3d 273, 277 (3d Cir. 2006). Bauer, Kluger‟s co-
conspirator, netted gains many times larger than those that
Kluger obtained from the conspiracy but the Court nevertheless
sentenced Bauer to a nine-year custodial term at the bottom of
his guidelines range. The Court, on the other hand, sentenced
Kluger to a 144-month custodial sentence, a term in the middle
of his guidelines range.

        Though there is an obvious disparity between Kluger‟s
and Bauer‟s sentences there was a good reason for the District
Court to have imposed a longer sentence on Kluger than on
Bauer. In this regard, we cannot overlook the circumstance that
Kluger served as the source of the information that permitted the
scheme to function. Furthermore, Kluger was an attorney who
took an oath to uphold the law. Moreover, it is really quite
remarkable that Kluger could not even wait to graduate from
law school before using his employment at a law firm to initiate
his illegal activities and it is equally remarkable that during most
of his legal career he was involved in criminal activity, so that in
an actual though perhaps not in a legal technical sense as the
term is used in the sentencing guidelines, he truly was a career

                                41
criminal. Furthermore, the presentence report makes clear that
Kluger had a legitimate income well into six figures from his
employment at various law firms, an income that should have
made it seem less urgent to him to enhance by criminal activity.
On the other hand, it is significant that Bauer had engaged in
extensive community service work pre- and post-arrest that
helped justify the within-guidelines sentence at the lower end of
his range. In any event, Bauer and Kluger both received within-
guidelines sentences, and such sentences generally do not lead to
disparities requiring that a defendant be granted relief because
“avoidance of unwarranted disparities was clearly considered by
the Sentencing Commission when setting the Guidelines
ranges.” Gall v. United States, 552 U.S. 38, 54, 128 S.Ct. 586,
599 (2007).

       The District Court informed the parties at sentencing that
it had examined a number of other insider-trading cases and
recognized “that right now sentencing judges have expressed
some dismay over the guidelines sentences applicable to some
defendants.”27 App. at 87. The Court specifically mentioned
the case of Winifred Jiau, who worked for a Silicon Valley
expert network and was convicted of leaking secret information
about tech companies to traders at hedge funds. See United
States v. Jiau, 794 F. Supp. 2d 484, 485 n.2 (S.D.N.Y. 2011).
Her sentencing guideline range amounted to six-and-a-half to

27
   The District Court even mentioned Morrison & Foerster‟s
2011 Insider Trading Annual Review cited by defense counsel
as evidence of the widespread use of downward variances in
such sentences.

                               42
eight years, but the district court nevertheless sentenced her to
four years in prison. The sentencing court in the Jiau case
explained: “There‟s no way that I‟m going to impose a guideline
sentence in this case [because] the guidelines give a mirage of
something that can be obtained with arithmetic certainty.” App.
at 87 (internal quotation marks omitted).28 But at Kluger‟s
sentencing, the District Court distinguished between the Jiau
case and Kluger‟s case. The overall profit attributed to Jiau‟s
information was only $2.5 million, and the Jiau court exercised
its discretion to sentence her based strictly on what she obtained
from her offense.29 On the other hand, in Kluger‟s case, the
District Court found that “unlike the sentenc[es] where judges
have seen no real connection between the guidelines driven by
the amount of gain and the conduct of the individual defendant
before [them],” there was no such disconnect in Kluger‟s case.
Id. at 96.

     Moving beyond Jiau, the District Court explained that
many of the other below-guidelines sentences stemmed from

28
   See Walter Pavlo, Winifred Jiau Gets 4 Years in Prison, And
What a Journey, Forbes (Sept. 21, 2011, 6:48 PM),
http://www.forbes.com/sites/walterpavlo/2011/09/21/winifred-
jiau-gets-4-years-in-prison-and-what-a-journey/.
29
  Though we use the term “only” in describing a profit of $2.5
million we do so because we are comparing $2.5 million to the
sometimes far greater illegal gains involved in other so-called
white collar criminal cases. Ordinarily, we, like most people,
would not refer to $2.5 million as a small sum as to us, like most
people, it is a lot of money.

                               43
agreements between the government and the defendant. For
example, the Court discussed the case of Joseph “Chip”
Skowron, who faced a guidelines range of 87-108 months but
struck an agreement with the government pursuant to which the
government recommended that the court impose a 60-month
custodial sentence on him. The Court also discussed what it
characterized as “the very notorious case” of Raj Rajaratnam
that we addressed above in our discussion of Kluger‟s
sentencing range. Rajaratnam, 2012 WL 362031. On May 11,
2011, a jury in the Southern District of New York convicted
Rajaratnam on 14 counts of conspiracy and securities fraud, in a
scheme that netted in excess of $60 million. Though
Rajaratnam faced an applicable guidelines range of 235-293
months, the court sentenced him to a custodial term of 132
months in spite of the government‟s portrayal of him as the
modern face of insider trading. The District Court here
differentiated between Rajaratnam and Kluger on the grounds
that in the latter‟s case, the “conduct [was] not just a trade, not
just a series of trades over one company . . . [b]ut 17 years of
trades and money laundering and obstruction of justice.” App.
at 90. By drawing the distinction, the Court not only
demonstrated why Kluger was not similarly situated to
Rajaratnam but also demonstrated that it took Kluger‟s 18
U.S.C. § 3553(a)(6) arguments into consideration.30

30
   We do not mean to suggest that defendants must have
identical backgrounds to merit comparison under § 3553(a)(6).
Yet we reiterate the explanation that we gave in United States v.
Jimenez, 513 F.3d 62, 91 (3d Cir. 2008), in which we rejected
the defendant‟s § 3553(a)(6) argument: “That [defendant] can

                                44
        Unfortunately for Kluger, the District Court found that
his actions constituted “a more thuggish, more direct example of
taking other people‟s stuff. And at [the] same time for all its
acridity, a highly successful scheme because of the money
laundering. Because of the simplicity, because of the limited
number of people involved in it. Because of the discipline.”
App. at 90. The Court added: “I don‟t know any of the other
defendants who are accused of individual trades. . . . Not a
pattern of how one runs a hedge fund but individual trades. I
haven‟t seen any of them with this number of trades. And this
consistency of engaging in insider information.” Id. at 97.
Moreover, the Court differentiated between Kluger and other
lawyers who have been convicted of insider trading: “[T]he
lawyers who have otherwise been prosecuted did not perform[]
the kind of [wholesale] purloining of information on a regular
and steady basis . . . .” Id.

       In the end, “[t]he touchstone of „reasonableness‟ is
whether the record as a whole reflects rational and meaningful
consideration of the factors enumerated in 18 U.S.C. § 3553(a).”
 Grier, 475 F.3d at 571 (footnote and citations omitted). We
find that the record more than meets that requirement, especially

find another case where a defendant charged with a somewhat
similar crime and facing the same advisory sentencing range
received a sentence outside of the applicable sentencing range
does not make [defendant‟s] within-Guidelines sentence
unreasonable. If that were the law, any sentence outside of the
Guidelines range would set precedent for all future similarly
convicted defendants. This is not, and cannot be, the law.”

                               45
because we “„give due deference to the district court‟s
determination that the § 3553(a) factors, on a whole,‟ justify the
sentence.”31 Tomko, 562 F.3d at 568 (citations omitted). As
long as “the district court‟s sentence is procedurally sound, we
will affirm it unless no reasonable sentencing court would have
imposed the same sentence on that particular defendant for the
reasons the district court provided.” Id. Here, we do not find
that no other reasonable sentencing court would have imposed
the sentence.

              b. Substantive Reasonableness

       Once we are satisfied, as we are here, that a district court
did not commit procedural error, we review the sentence for
substantive reasonableness. See United States v. Negroni, 638
F.3d 434, 443 (3d Cir. 2011). As noted above, the District Court
imposed a within the guidelines custodial sentence of 144
months, and therefore we take into account our recognition that
“[a] sentence that falls within the recommended Guidelines
range, while not presumptively reasonable, is less likely to be
unreasonable than a sentence outside the range.” United States
v. Lessner, 498 F.3d 185, 204 (3d Cir. 2007) (citation omitted).

        Kluger‟s focus on the procedural aspects of the sentence
offers little in the way of substantive argument regarding what

31
   “[T]he district court‟s superior vantage point compels us to
give due deference to [its] determination that the § 3553(a)
factors, on a whole, justify the sentence.” United States v.
Merced, 603 F.3d 203, 214 (3d Cir. 2010) (alteration in original)
(internal quotation marks and citations omitted).

                                46
he believes was the District Court‟s “draconian sentence.”
Appellant‟s br. at 46. He provides an overview of mitigating
factors that echoes the arguments under § 3553(a)(1) that we
already have discussed regarding his history and characteristics.
 Kluger reiterates his argument that the sentence is particularly
unreasonable as compared to that imposed on Bauer, who
reaped millions more in profits and yet received a custodial
sentence of 108 months at the bottom of his guidelines range
which was shorter than that imposed on Kluger. Yet Kluger‟s
argument does not give adequate attention to the circumstance
that he received a two-level sentencing enhancement for abusing
his position of trust as an attorney and did not perform a
commensurate level of community service pre- and post-arrest
as did Bauer, thereby qualifying Kluger for a higher guideline
range and justifying his mid-range sentence.

        After reiterating the § 3553(a) factors, Kluger summarily
concludes that his sentence fails the test of substantive
reasonableness and then quotes from Judge Fisher‟s dissent in
Tomko to support his position that: “[I]f substantive
reasonableness review is to mean anything, courts of appeals
must attempt to give content to this component of our review
until the Supreme Court provides further guidance.” Tomko,
562 F.3d at 591 (Fisher, J., dissenting). But the concern that
Judge Fisher expressed in his Tomko dissent is certainly not a
concern here. We do not doubt that Kluger received a fairly
severe sentence as compared to Bauer and to other defendants in
insider-trading cases who were convicted in the Southern
District of New York. Yet we do not exercise plenary review
when examining the substantive reasonableness of a sentence,
and the District Court set forth adequate reasons “to satisfy [us]

                               47
that [it] considered the parties‟ arguments and [had] a reasoned
basis for exercising [its] own legal decisionmaking authority.”
Merced, 603 F.3d at 215-16 (citing Rita v. United States, 551
U.S. 338, 356, 127 S.Ct. 2456, 2468 (2007)). Furthermore,
„“[t]he fact that [we] might reasonably have concluded that a
different sentence was appropriate is insufficient to justify
reversal of the district court.”‟ Tomko, 562 F.3d at 560 (citation
omitted).32 The District Court was in a superior position than
we are to make the sentencing determination in this case, and we
afford great deference to its decision. Kluger, as the challenging
party, fails to meet his burden to overcome the deference that we
owe the District Court‟s determinations and we cannot say that
“no reasonable sentencing court” would have imposed the same
sentence that it imposed. Consequently, we will not disturb the
sentence on the grounds that it was substantially unreasonable.
See id. at 568.

                      V. CONCLUSION

      For the foregoing reasons, we will affirm the judgment of
conviction and sentence entered June 4, 2012.

32
  We are not implying that if we had imposed the sentence in
the first instance that we might have imposed a shorter sentence.
 We simply are making it clear that even if we would have done
so that circumstance would not require that we reverse here.

                               48