The big legal ethics story of the day is a Wall Street Journal report showing that 131 federal judges, appointed by nearly every President from Lyndon Johnson to Donald Trump, have violated federal law by failing to recuse themselves in cases where either they or family members held a financial interest in one of the parties, meaning that the judge’s decision could have resulted in a direct or indirect benefit. This is, of course, a conflict of interest. Even if the judge was as trustworthy as a saint and would never dream of allowing such a conflict to interfere with his or her judgment, allowing these cases to appear before them violates the judicial ethics canon requiring judges to avoid even the appearance of impropriety.
The Wall Street Journal report found that the judges failed to recuse themselves from 685 court cases since 2010. About two-thirds of all federal district judges had holdings of individual stocks, about one of every five of these heard at least one case involving those stocks without withdrawing. When these judges participated in such cases, about two-thirds of their rulings on motions favored the party that their or their family’s financial interests would benefit from prevailing.
Sure, that could be a coincidence. The point is that it raises suspicion,and suspicion undermines trust. The requirement that judges must avoid the appearance of impropriety exists to prevent exactly this.
As a result of the Journal’s report, 56 judges have directed court clerks to notify parties in 329 lawsuits about their breach. New judges may be assigned to the cases. Writes law prof Jonathan Adler on the Volokh Conspiracy, “The majority of the cases identified by the WSJ may have involved simple oversights, but the report highlights the need for federal judges to place their investments in index funds and equivalent instruments or place their investments in trust.”
The principle that no one should be a judge of his or her own cause was first enunciated by Congress in 1792 to assure the public that courts could be trusted. Since 1974, Federal law has prohibited judges from hearing cases that involve a party in which they, their spouses or their minor children have a “legal or equitable interest, however small.” The law requires judges to avoid even the appearance of a conflict even though most lawsuits don’t directly affect a company’s stock price, because, as the Supreme Court wrote in 1988, the law’s purpose is to promote confidence in the judiciary.
Well, back to the drawing board!
Ethics Alarms 
Does the restriction apply ONLY to owning individual stock, or does it also apply to stocks held in a judge’s mutual fund or something similar?
My understanding is that stocks held in mutual funds count.
So wouldn’t investing in an Index Fund as recommended disqualify a large number of judges from cases in involving companies in the findt? I for instance, as a hypothetical judge, couldn’t hear any case involving and S&P 500 company, because I own a fund that tracks the S&P.
And my understanding is WRONG. See valky’s comment.
There’s a carve-out specifically making mutual funds exempt. Canon 3C(3)(c)(i)
https://www.uscourts.gov/judges-judgeships/code-conduct-united-states-judges#d
That’s good. That was exactly my issue with this. I have an index fund; I have sector funds (Energy/technology/etc. that spread their investments over a large swath of a sector).
For the most part, I have no idea what I own because I own very few stocks in individual companies.
-Jut
You’re in the clear. Good luck with your confirmation hearing.
Jesus Fucking Christ. They get their entire salaries until they croak. And an office and a secretary. Greedy fucking shameless bastards.
Strong comment to follow.
We’re WAITING…………………..
Being a Federal District Judge (not a magistrate, who only serves for 7 years at a time) comes with a LOT of perks. No wonder they think of themselves as gods.
And then there are circuit court judges. They blithely ignore what the district/trial court judges rule on a regular basis because they know better. A district court decision is hardly worth the paper it’s written on. A useless exercise.
Was involved in getting a very good decision from a Northern District of Illinois judge on a forfeiture case. The DOJ appealed to the Seventh Circuit and they overturned the case on, wait for it, an insolvency theory which, of course, had never been brought up or considered at trial. The august appellate court judge who clearly dominated the panel just pulled it out of his ass sua sponte. He was also incredibly rude and snide during the oral argument.
See also the last paragraph of the wikipedia section at https://en.wikipedia.org/wiki/Board_of_Inland_Revenue_v_Haddock#Similar_fictional_cases (the “Similar fictional cases” section of the article).
There are so many judges who aren’t even remotely partisan or unbiased even without family involved. For example, the 6th circuit court is where you go to block anything related to GMOs, chemicals or oil and gas development. Everyone knows that. They’re quite busy with a lawsuits on every single chemical used for pest control brought to you by…. Non-profits. Side note, my uncle almost got 20 years in jail for breaking into his own vehicle. The judge was finally reported and suspended and her cases reviewed and thrown out because she was demanding prescription drugs from her staff.
OK, if you are a federal judge, you never had any business buying stocks. You had to know (or should be fired for incompetence) that you would have cases involving whatever stocks you bought. At least 20% did it anyway. All (as far as I can see) Federal Reserve Bank Presidents were involved in stock market investments that would result in serious personal losses if they do not continue to print $180 billion each month to boost the stock market. The Chairman of the FED decided to bail out municipal bonds last year. It turns out he owned several $ million of them. It is almost certain that President Biden received $millions from foreign countries through his son’s efforts. Didn’t Nancy Pelosi’s husband get access to bank IPO’s making him (and her) millions while she sat on committees regulating the same banks?
Why is it considered a conspiracy theory to think that our government is corrupt and the system is rigged? Is this causing our young adults to not want to work hard because there is no point in working in a rigged system?
https://www.rt.com/usa/485430-fed-buys-junk-bonds-wtf/
https://www.cnbc.com/2021/09/17/fed-officials-owned-securities-it-was-buying-during-pandemic-raising-more-questions-about-conflicts.html
Follow-up: Both the Boston and Dallas Fed Presidents have resigned over their unethical trades. Now, FED vice-chair Richard Clarida seems to have traded up to $5 million on the stock market the day before Powell announced the FED would back up Wall Street with favorable action (boosting certain segments of the stock market).