Stock conflicts weaken trust in the judicial branch, too

The integrity of our democratic institutions cannot be maintained by officials who place — or appear to place — their own private financial interests before the work of the public. From recent violations of existing financial reporting requirements and investigations into pandemic-related stock sales, there has emerged a growing, and bipartisan, consensus in Washington that members of Congress should not engage in the buying and selling of stocks.

This problem is arguably worse in the judiciary. Our federal judges and Supreme Court justices serve for life and have no meaningful consequences for failing to live up to their ethical obligations, save the notion that perhaps someday Congress might open impeachment hearings (not likely).

Recent reporting by the Wall Street Journal found that at least 136 judges participated in at least 950 cases in which they held a financial interest — in violation of the federal recusal law — between 2010 and 2018. None of the judges has faced any serious consequences for their lawbreaking, and when pressed, many declined to accept full responsibility for their transgressions, instead blaming clerks or conflict-check software or refusing to acknowledge there was a problem at all because, they assured reporters, the conflicts “neither affected nor impacted” their decisions in the case. Okay. 

Even when judges and justices do follow the recusal guidance, and step aside when maintaining a financial stake in a litigant, there is still harm done by their decision to prioritize their personal preference to hold a particular financial product over fulfilling all the work that comes with their public office.

In the case of the Supreme Court, that harm is most acute, whereby the litigant is forced to present their case before a diminished panel. According to their most recent financial disclosures, three justices hold stock in a total of 41 publicly traded companies: Chief Justice John Roberts (five companies) and Justices Stephen Breyer (eight) and Samuel Alito (28). Therefore, after recusals, a litigant could conceivably find their case considered by a six-, seven- or eight-member court. (Blended investments like mutual funds and retirement accounts, which each of the nine has, don’t typically trigger the disqualification requirement.) 

Unlike at the Supreme Court, judges at the district and circuit court levels are fungible, so stock-based recusals are less burdensome on litigants. However, they are not without cost. For instance, imagine a major corporation is considering filing litigation before a district court comprising four judges, and three of them hold their stock. They’d know which judge is likely to hear their case before it’s even filed. All must have access to the courts, but none should have access to a specific judge of choice.

That there are federal officials who cannot fully perform the duties the public has entrusted to them due to their own interest in playing the market should be cause for concern to the broader populace. If someone is unwilling to put the public’s interest before their own, then perhaps that person should not hold public office.

Congress may finally be getting fed up with the status quo. Just last week the Senate joined the House in passing the Courthouse Ethics and Transparency Act, which would essentially extend to the judiciary the financial reporting requirements that have existed in the other two branches as a result of the 2012 STOCK Act. (Judges’ annual financial disclosures would finally be posted online, and they’d have to report their stock transactions within 45 days of a purchase or sale.) Minor differences between the Senate and House versions need to be worked out before the bill can become law, but that doesn’t look to be a difficult task.

As the House and Senate consider other legislation to ensure members of Congress do not have private financial conflicts influencing their public work — whether via stock ownership bans, stock trading bans, blind trusts and the link; the list of proposals grows by the day — they would do well to ensure that members of the judiciary generally play by the same rules. 

The judiciary, and our trust in it, would be strengthened if Congress were to prevent judges and justices from putting their financial interests ahead of the public interest. 

Tyler Cooper is the senior researcher of Fix the Court, a nonpartisan group that advocates for greater transparency and accountability in the federal judiciary.