Photo Credit: Photograph of the New York Stock Exchange, in Gabriella Hammond, How to Experience the New York Stock Exchange, The Wall Street Experience (Sept. 4, 2023), https://www.thewallstreetexperience.com/blog/experience-the-nyse/ (“The New York Stock Exchange – also known as the “Big Board” – is one of the oldest and largest stock exchanges on the planet. Located on Wall Street in Lower Manhattan, the NYSE stands as both a symbol of capitalism and as the financial center of the U.S.”).
Authored by Cameron C. McCormack
In May 2022, President Joe Biden signed The Courthouse Ethics and Transparency Act (“the Act”).[1] The Act now requires online publication of financial disclosure reports of judicial officers (including Supreme Court Justices), bankruptcy judges, and magistrate judges.[2] The Ethics in Government Act of 1978 (“EIGA”) originally established financial disclosure reports for many high-level government officials and employees, including the Chief Justice of the United States and the Associate Justices of the Supreme Court.[3] But recent news articles highlighting undisclosed trips by an Associate Justice sparked public outrage regarding the transparency of the judicial system in the United States.[4] This increased scrutiny around the transparency of the judicial system in our county prompted lawmakers to revisit court ethics and the interpretation of the EIGA’s established reporting requirements.[5]
Initially, the EIGA required senior government employees to ensure financial interests were public, including sources of income, liabilities, gifts, and transactions.[6] Although disclosing their financial interests were required, the information could only be accessed through thumb drives or paper copies.[7] However, the recent media attention regarding an Associate Justice’s undisclosed trips brought the EIGA to the forefront of the media, sparking lawmakers to change the EIGA. The Act now requires the Administrative Office of the United States Courts (“AO”) to establish a “searchable internet database to enable public access to any report required to be filed” under the EIGA.[8] Additionally, the Act now requires federal judges to report any purchase, sale, or exchange of securities that exceeds $1,000 within 45 days of the transaction.[9]
Considering a recent article published by the Wall Street Journal, it seems that having knowledge of the financial interest judges may have in real-time could be crucial information for an attorney preparing to go before that judge.[10] The Wall Street Journal examined the financial disclosure forms submitted each year from 2010 to 2018 by approximately 700 federal judges who disclosed ownership of shares in major corporations.[11] Subsequently, this information was cross-referenced with court records from civil cases.[12] According to The Wall Street Journal’s investigation, 129 federal district judges and two federal appellate judges were involved in at least one case where a stock owned by them or their family was either the plaintiff or defendant.[13] The judges provided several justifications for their actions.[14] In certain instances, they attributed errors to misspelled names or mistakes made by clerks.[15] In other cases, the judges claimed they believed it unnecessary to disqualify themselves when their role in the case was minimal, when the stock belonged to a family member, or when the stock was traded through an account managed on their behalf, rather than by the judges personally.[16] All of these justifications were wrong as a matter of law.[17] Federal judges are supposed to “disqualify” themselves in any proceeding in which their “impartiality might reasonably be questioned.”[18] The law also requires recusal when the judge knows he or she “has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding.”[19]
Recent issues have delayed what inevitably will be a valuable resource for any attorney. The Act requires annual disclosures to be published within 90 days of submission by judges, while interim reports must be filed within 45 days of the transaction.[20] However, the AO has faced challenges with posting the annual disclosure reports.[21] More specifically, while judges submit the required disclosure information, the AO has struggled to post the yearly reports from nearly 2,500 judges.[22] The possible delay in posting the required reports could be due to the looming government shutdowns.[23] While Congress passed a short-term bill to extend last year’s funding levels until mid-November, the AO requests $297,000 for the fiscal year 2024 to support hiring ten people to process the financial disclosures.[24] Another possible delay in the disclosures could be due to specific provisions in the Act that allow for a delay in information if the AO finds “revealing personal and sensitive formation could endanger that individual or a family member of that individual.”[25]
A reasonable attorney will conduct thorough research regarding their client, the issue at hand, the applicable law, the venue, and the judge presiding over the case. Before the Act was signed into law in 2022, financial disclosures by judges were challenging to access because they were stored on paper or thumb drives. However, an attorney will now have all this information readily available on a database to ensure complete financial transparency from the federal judge in the case.[26] When fully implemented, the online database provided by the Act should be a valuable resource for any attorney.
[1] 5 U.S.C. § 1305.
[2] Id.
[3] Delaney Marsco, At 40 Years Old, The Ethics in Government Act is in Need of a Tune-up, Campaign Legal Center, https://campaignlegal.org/update/40-years-old-ethics-government-act-need-tune (Oct. 26, 2018) (“Born out of the post-Watergate scandal reforms, EIGA is one of the most important laws on our books ensuring transparency at our highest levels of government and accountability from our nation’s most senior decisionmakers.”).
[4] Brett Murphy & Alex Mierjeski, Clarence Thomas’ 38 Vacations: The Other Billionaires Who Have Treated the Supreme Court Justice to Luxury Travel, ProPublica (Aug. 10, 2023, 5:45 AM), https://www.propublica.org/article/clarence-thomas-other-billionaires-sokol-huizenga-novelly-supreme-court) (“At least 38 destination vacations, including a previously unreported voyage on a yacht around the Bahamas; 26 private jet flights, plus an additional eight by helicopter; a dozen VIP passes to professional and college sporting events, typically perched in the skybox; two stays at luxury resorts in Florida and Jamaica; and one standing invitation to an uber-exclusive golf club overlooking the Atlantic coast.”).
[5] See Courthouse Ethics and Transparency Act, Pub. L. No. 117–125, 136 Stat. 1205 (2022); see also 68 Cong. Rec. H4522 (daily ed. Apr. 27, 2022) (statement of Rep. Hakeem Jeffries) (“Failure to recuse can cause real harm to parties seeking fair and impartial justice and leave a cloud of doubt over any decision that is made once the conflicts are subsequently uncovered.”).
[6] See Ethics in Government Act of 1978, Pub. L. No. 95–521, 92 Stat. 1824 (1978) (codified as amended at 5 U.S.C. app. §§ 101-11).
[7] New Database Eases Release of Judges’ Finance Reports, United States Courts (Nov. 7, 2022), https://www.uscourts.gov/news/2022/11/07/new-database-eases-release-judges-finance-reports (“Federal judges have filed annual financial disclosure reports for decades. Previously, there was no central database, and FDRs were available only in paper documents or on thumb drives.”).
[8] 5 U.S.C. § 13107.
[9] Id.
[10] See James V. Grimaldi et al., 131 Federal Judges Broke the Law by Hearing Cases Where They Had a Financial Interest, The Wall St. J. (Sept. 28, 2021, 9:07 AM), https://www.wsj.com/articles/131-federal-judges-broke-the-law-by-hearing-cases-where-they-had-a-financial-interest-11632834421.
[11] See id.
[12] See id.
[13] See id.
[14] See id.
[15] See id.
[16] See id.
[17] See generally 28 U.S.C. § 455.
[18] Id. § 455(a).
[19] Id. § 455(b)(4) (“[Any justice, judge, or magistrate judge of the United States] knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding.”).
[20] Id. § 1305.
[21] Suzanne Monyak, New Disclosure Site Slow to Post Judicial Stock Trading Reports, Bloomberg Law (Oct. 11. 2023, 3:45 AM), https://news.bloomberglaw.com/us-law-week/new-disclosure-site-slow-to-post-judicial-stock-trading-reports
[22] See id.
[23] See id.
[24] See id.
[25] 5 U.S.C. § 13107(3)(A).
[26] See 5 U.S.C. §§ 13105, 13107.
American Journal of Trial Advocacy 