Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, July 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Requirement for federal judges to disclose big stock trades sent to Biden’s desk

The legislation, now headed to the president's desk, aims to create transparency in the courts about potential conflicts of interest.

WASHINGTON (CN) — House lawmakers passed legislation Wednesday that expands the financial disclosure requirements for federal judges, including the justices of the Supreme Court, as lawmakers continue to scrutinize the ethics codes and regulations that apply to the nation's highest courts.

The Courthouse Ethics and Transparency Act requires that federal judges report securities transactions of over $1,000 within 45 days of a trade and that the judiciary create a public digital database of these financial disclosure forms and post disclosures within 90 days of being filed.

Federal lawmakers are required to follow similar disclosure requirements under the Stock Act, and Wednesday's legislation modifies the Ethics in Government Act of 1978 to apply the same rules to all federal judges, including bankruptcy and magistrate judges.

Having already passed the Senate earlier this month with unanimous consent, the legislation made it through the House by voice vote. It will now head to the president's desk to be signed into law.

The judiciary will have 180 days to create the online database after President Joe Biden signs the legislation into law, but the Administrative Office can ask for extensions to that deadline.

Passage of the legislation comes on the heels of a Wall Street Journal report last year finding that, between 2010 and 2018, at least 130 federal judges failed to recuse themselves from cases in which they or a family member had stock in a company involved in the case.

Federal judges are not allowed to hear cases in which they, their partner or children have a financial stake, but existing rules have made it difficult to identify cases where such conflicts have occurred.

"This is likely not to lead to a lot more recusals, but this is certainly going to lead to the kind of information that attorneys need on behalf of their clients when they're working through a case," Republican Representative Darrell Issa of California, a member of the House Judiciary Committee, said on the House floor Wednesday. "We're not just dealing in the failure to recuse here. Reporting, transparency, in fact, empowers both sides to know the lay of the land that might be very meaningful in a case."

Scrutiny of the judiciary and its code of conduct has become a central issue in Washington as disputes closely linked with political ideologies — abortion, elections and judicial nominations, to name a few — wind up before the courts.

Recent reporting about Supreme Court Justice Clarence Thomas' wife Ginni Thomas, a well-known conservative activist, and her communications with former President Donald Trump's chief of staff Mark Meadows in the leadup to the Jan. 6 insurrection has turned conversations about judicial conduct into a political firestorm.

"I think it's an outgrowth of congressional gridlock over the last few decades. Nature abhors a vacuum and so does power. In Washington, D.C., that Congress is constantly bickering amongst itself, both Republicans and Democrats and factions within those two parties, they're going to cede power to the judiciary," Gabe Roth, executive director of judicial advocacy group Fix the Court who helped work on the legislation, said in an interview. "So, with this outsized power should come increased scrutiny. We want to know what our justices' financial entanglements are, what their personal interests are, who they're meeting in secret with, who's flying them around the country."

Later Wednesday, the House Judiciary Committee will meet to discuss whether the Supreme Court needs changes to its ethics code, including expansions of the guidelines for when and how a justice should recuse themselves from a case.

Follow @@rosemwagner
Categories / Courts, National, Politics, Securities

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.