Federal judges would face tougher stock trading rules under bipartisan bill

Federal judges would be required to report stock transactions over $ 1,000 within 45 days and publish their financial disclosure forms online under legislation proposed by a bipartisan group of lawmakers in the Senate and House of Representatives.

Both bills were drafted by Democrats and Republicans in response to a Wall Street Journal investigation revealing that 131 federal judges violated federal law by hearing lawsuits involving companies they claimed to own shares in, according to Congress advisers.

The House Judiciary Committee is also considering a series of new accountability rules for the judiciary. He has scheduled a hearing for Tuesday to examine the “violations identified in the Wall Street Journal report” involving federal judges who hold stocks, and will question the chair of the Federal Judicial Ethics Committee and judicial ethics professors.

Smaller bills in the House and Senate increase the reporting requirements for judges who frequently negotiate stocks. The Journal’s investigation found 61 judges who did not only hold shares of companies litigating in their courtrooms. Accounts held by judges or their families traded shares as trials progressed.

The Senate version of the stock trading reporting bill, known as the Courthouse Ethics and Transparency Act, would require judges to comply with the same law that applies to the president, vice -president, administration officials appointed by the president, senators and members of the House, according to congressional advisers and a bill. This law, known as the STOCK Act (for Stop Trading on Congressional Knowledge), requires government officials to report financial transactions greater than $ 1,000 within 45 days.

“This legislation would subject federal judges to the same disclosure requirements as other federal officials so that we can be sure that litigants are protected from conflicts of interest and that cases are decided fairly,” said the sponsor of the bill. , Senator John Cornyn (R., Texas), mentioned.

Senator John Cornyn said the legislation he sponsored “would subject federal judges to the same disclosure requirements as other federal officials.”


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Andrew Harnik / Associated press

A second provision would require the US Courts Administrative Office to create an online database of all judges’ financial statements. The agency would be required to post the reports online within 90 days of receiving the information in “a full-text search, sort and download format for public access.” The bill would come into force six months after its passage.

In response to the proposed legislation, David Sellers, a spokesperson for the U.S. Courts Administration Office, the agency that administers federal courts, said the judiciary publicly publishes judges’ financial disclosure reports in electronic form at no cost to the requesting party. In the past, the US Courts Administrative Office has resisted proposals to make financial information more easily accessible online, citing security concerns.

“We are considering ways to automate the publication of these reports so that they are available more quickly and in a more convenient way to the public, while balancing the serious safety and security considerations that exist,” said Mr. . Sellers.

Hidden interests

Read more from the Wall Street Journal survey:

The text of the legislation referred to Journal articles, stating that “recent reports indicate that some federal judges have not recused themselves from cases and controversies in which the financial interests of federal judges are involved.”

The bill is co-sponsored by members of the Senate Judiciary Committee from both parties. Written by American Senses Cornyn and Chris Coons (D., Del.), The bill is co-sponsored by Democrats Sheldon Whitehouse of Rhode Island, Jon Ossoff of Georgia and Senate Judiciary Committee Chairman Dick Durbin of Illinois and Republicans John Kennedy of Louisiana, Ted Cruz of Texas, and Chuck Grassley of Iowa.

“Litigants need to be assured that they will benefit from an impartial hearing, free from outside influence and based solely on the facts and the law,” said Senator Coons.

On the House Judiciary Committee, Representatives Deborah Ross (D., NC) and Darrell Issa (R., Calif.) Sponsor the associated bill, along with House Speaker Jerrold Nadler (D., NY) and Representative Chip Roy. (R., Texas).

Separately, Representative Nadler is writing what he calls the 21st Century Courts Act, which should include penalties for judges who commit disqualification violations, according to congressional advisers.

Mr Nadler introduced a similar bill in early 2020 that included a requirement to publish judges’ financial disclosure forms online; the effort lost momentum during the pandemic.

Mr Nadler plans to revive the legislation, after the Journal reported that judges have failed to disqualify themselves from 685 court cases in the country since 2010. Representatives Nadler and Hank Johnson (D., Ga.), Who is president of the subcommittee that oversees federal courts, said late last month that they would hold hearings and reintroduce the bill.

“This would appear to constitute a massive failure not only of the individual judges, but of the entire system that is ostensibly in place to prevent this unlawful conduct,” said Messrs. Nadler and Johnson in a statement regarding the Journal report.

The changes in how and when federal judges are required to disclose financial transactions are said to be the first in decades. The bill amends the Ethics in Government Act 1978, which requires financial disclosure reports.

House Judiciary President Jerrold Nadler plans to revive a courts bill that had lost momentum during the pandemic, after the Journal’s investigation into judges’ stocks.


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Greg Nash / Press Group

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.” be it”. Violations of the 1974 law are hardly ever made public.

Jan Baran, an ethics lawyer who served on the American Bar Association’s commission that last revised the Model Code of Judicial Conduct, said the Journal’s findings underscored the need for reforms to bring about “Better transparency, faster disclosure and better policing of conflicts”.

Mr Baran said he believed the judges had become complacent due to the lack of transparency. “Because access to annual disclosures from federal judges is so difficult and feared by lawyers, judges have not benefited from the scrutiny that other public officials receive when they make similar public disclosures.” , did he declare.

Currently, judges’ financial statements are filed annually by May of the following year. The Free Law Project, a non-partisan nonprofit legal research group that recently posted judges’ disclosures for 2010 to 2018 online, said it was waiting for the release of the 2019 judge’s disclosures.

Litigants usually don’t see the forms and in most cases they are not published early enough to be informative. If plaintiffs or defendants learn that a judge in their case has a financial interest that may require a challenge, they can request a challenge. In general, it is often up to the judge with the potential conflict to make the decision.

At this week’s hearing, Judge Jennifer Elrod, who is chair of the U.S. Judicial Conference’s Codes of Conduct Committee, is scheduled to testify, along with the law professors. Jamal Greene of Columbia University, Renee Knake Jefferson of the University of Houston, and Thomas Morgan of George Washington University.

Write to Coulter Jones at [email protected] and Joe Palazzolo at [email protected]

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