Politicians and Fed officials aren’t the only ones negotiating stocks with conflicts of interest – judges do, too, and new report shows 131 of them did so illegally


  • 131 federal judges broke US law by not recusing themselves from lawsuits in which they had a financial interest, the WSJ found.
  • 61 judges or their families not only held shares in companies they supervised in court, they also traded them in the course of business.
  • “I had no idea that I had an interest in any of these companies in what was a very small retirement account,” a judge said.
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The investment world has been in the throes of conflict recently. Two prominent Federal Reserve officials have found themselves embroiled in controversial stock market transactions, while House Speaker Nancy Pelosi has become popular as “queen of stones”, thanks to her own professions, as well as to those of her husband.

Pelosi made some stock purchases that could be a conflict of interest as part of his work, while Fed Chairmen Eric Rosengren and Robert Kaplan recently said they would step down for controversial stock trading during their tenure.

To add to the problem, more than 130 federal judges have violated US law by hearing cases involving companies in which they or their families have shares, according to a Wall Street Journal survey.

The Journal examined the financial disclosures of about 700 federal judges, filed each year from 2010 to 2018, which disclosed holdings in individual large-cap stocks, and compared them to tens of thousands of court cases.

Judges interviewed by the WSJ said they were either unaware of their violations, or mistakenly believed they were not required to recuse themselves.

“I am mortified”

Judge Timothy Batten, appointed by former President George Bush, heard 11 JPMorgan-related lawsuits in 2010 and 2011, even though he owned shares in the bank. Most of these lawsuits have yielded results in favor of the bank, the WSJ found.

“I am mortified,” Justice Batten told the WSJ by telephone when alerted to the violations, which took place before he joined the codes of conduct committee in 2019. “I had no idea that I had an interest in one of those companies in what was a very modest retirement account “which was managed by a broker,” he said, adding that he regretted being involved in a conflict of interest.

Batten said he stopped investing in individual stocks in 2021 and switched to mutual funds, which do not require recusal.

California Judge Janis Sammartino, also appointed by Bush, has traded stocks such as Bank of America, Deutsche Bank, HSBC, JPMorgan and Wells Fargo while hearing 18 lawsuits involving one or more of those companies. Overall, she heard 54 cases involving a conflict of interest.

Sammartino’s spokesperson told the WSJ that she didn’t see how there could be a conflict because her shares are held in a managed account.

What the US Court Administrative Office Said

“The Wall Street Journal’s report on cases where conflicts were not inadvertently identified before a case was resolved or transferred is troubling, and the administrative office is carefully examining the matter.”

Main conclusions:

1. Judges appointed by nearly every president, from Lyndon Johnson’s tenure to Donald Trump, have not withdrawn from 685 cases in the United States since 2010.

2. About 66% of federal judges have disclosed their holdings in individual actions, and one in five of them has heard at least one case involving those actions.

3. After being informed of their violations, 56 judges instructed the registrars to alert the parties involved in 329 legal actions that they should have been challenged. This indicates that new judges may be assigned to prosecutions, which could affect decisions.

4. During their involvement in such cases, approximately 66% of decisions were made in favor of personal financial interest.

5. 129 federal district judges and two federal appellate judges have had at least one case in which an action they held was a plaintiff or a defendant.

6. 61 judges or their families not only held shares in companies that were plaintiffs or defendants in their courts, they also traded them in those cases.

7. Although the value of the shares is not legally significant, the stocks were over $ 15,000 in 173 cases and $ 50,000 in 21 cases.

8. The violations violate a fundamental principle of American law that was first established by Congress in 1792: no one should be a judge in their own case.

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