Who said federal judges couldn’t trade the stocks of the companies they preside over?
The appearance of impropriety seems to be behind the resignations this week of two regional Federal Reserve chairmen, Eric Rosengren from Boston and Robert kaplan from Dallas. At issue, all the securities they traded while making potentially critical decisions to the performance of those securities, much like two other esteemed former public servants. The question now is whether about a tenth of the federal judiciary join them?
About two-thirds of federal district judges disclosed holdings of individual actions, and nearly one in five who heard at least one case involving those actions…. When judges have been involved in such cases, about two-thirds of their decisions on the contested petitions have been favorable to their financial interests or those of their families….
Nothing prevents judges from owning shares, but federal law since 1974 has prohibited judges from hearing cases involving a party in which they, their spouses or minor children have a “legal or equitable interest, however small.” … ”. Although most lawsuits do not directly affect a company’s stock price, the Supreme Court ruled in 1988 that the purpose of the law is to promote confidence in the judiciary….
The results “are both surprising and disappointing,” said Timothy Batten Sr., chief justice of the United States District Court for the Northern District of Georgia and member of the Codes of Conduct Committee of the United States Judicial Conference. .
Oh, do you think that’s surprising, Tim? Hold on.
Judge Batten himself owned shares in JPMorgan Chase & Co. as he heard 11 lawsuits involving the bank, most of which were successful in the bank’s favor, according to the Journal’s analysis.
“I am mortified,” Justice Batten said in a telephone interview when he was briefed on his violations, which occurred in 2010 and 2011, before he joined the codes of conduct committee in 2019. “I didn’t know I had an interest in one of these companies in what was a brokerage-managed retirement account.
“I just blew it up. I regret any questions I have created or any appearance of impropriety or conflict of interest, ”he said.
Courage, Tim: It could have looked worse, as it does for Chief Justice Emily Marks of the US District Court for the Central District of Tennessee, who you might not be surprised to learn is someone named. by former President Donald Trump, himself never one to worry too much about conflicts of interest or letter of the law.
In the lawsuit, Jacob Springer and Jeanetta Springer of Roanoke, Alabama, acted as their own attorneys to challenge Wells Fargo’s foreclosure of Ms. Springer’s father’s house…. Judge Marks… was assigned the case in mid-August 2018. The judge bought Wells Fargo stock at the end of the month. In September, it adopted the recommendation of a magistrate to dismiss the Springers’ complaint, a decision upheld on appeal…. Mr. Springer said: “This is outrageous. How am I supposed to know she owns shares in Wells Fargo? “
Seriously: It’s hard enough to tell if Wells improperly foreclosed on your home in the first place.
131 federal judges broke the law by hearing cases in which they had a financial interest [WSJ]
Boston Fed Chairman Rosengren Abruptly Announces Retirement 9 Months Earlier Than Expected [CNBC]
Dallas Fed Chairman Robert Kaplan resigns after stock trading controversy [NBC News]
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