Judges Trading

      Judges Trading jpeg.jpg
      Judges Trading

      Corruption and conflicts of interest among federal judges was the subject of a big investigation by the Wall Street Journal. It found 130 federal judges broke the law by hearing hundreds of cases when they had financial conflicts of interest. As a result of that series, Congress has proposed a law requiring judges to promptly report their finances, stock trades, and post the disclosures online, but it’s being held up in the Senate. Today, we hear more from James Grimaldi, a Pulitzer Prize winning senior writer at The Wall Street Journal.

      James Grimaldi: Well, I was looking into the finances of Amy Coney Barrett, and I was looking for a way to digitize them. By the way, her finances weren't terribly interesting. It didn't result in a story, but I found someone who was digitizing the finances of federal judges, and their disclosure forms are very hard to get. They're cumbersome. They make it difficult. And someone, who in a nonprofit organization that was actually digitizing them, I knew immediately, we could look into see, are the judges following this very simple law which says you cannot hold even a single share of stock in a company and hear a case involving that company. Eight months later, we had more than 130 judges who had broken the law involving 700 lawsuits.

      Sharyl: You wrote, "Judge Rodney Gilstrap, Chief of the U.S. District Court for the Eastern District of Texas, had the largest number of conflicts in the Journal's analysis, 138 cases assigned to him involving companies in which he or his wife held an interest."

      Grimaldi: Mm-hmm (affirmative).

      Sharyl: What happens when you discovered that? You said it's against the law?

      Grimaldi: Yeah. So he fought us on it. He really essentially denied that some of it was a conflict. He was very unclear about how his finances were invested. Through about, I don't know, it was like 8 exchanges, we found out that he had a pot for his investments. His wife had a bundle for her investments. And then she had trust, which had a lot of investments. And he was trying to say that her trust in which she had an ownership interest did not qualify under the law. However, the administrative office of the courts and their opinions on this law that goes back to 1974 said very clearly, "If your spouse has a financial interest in a company, you can't hear a case from that company.”

      Sharyl: Why do you think these conflicts are so common?

      Grimaldi: I think the reason that they're so pervasive is in attention to detail. Very rarely does anyone actually see the forms. They know that no one sees the forms. They don't take this at all very seriously, even though it's a law that's meant to build confidence in the judiciary. (Back on cam) But most importantly, it's the lack of transparency. It's been very difficult to get these records. If you wanted to get a record, say you wanted to look into a judge, you would have to fill out a form, take it to the administrative office of the courts who will then show it to the judge. So if you're a lawyer filing a... have a lawsuit before a judge, you're going to be very reluctant to bring that up because a judge is going to get irritated with you and you might get some bad rulings, even if it's subconsciously.

      Sharyl: What would you say is the takeaway for people out of this whole series and what you learned?

      Grimaldi: That transparency is a big thing in American democracy, that sunlight is the best disinfectant. I really do believe this is a good remedy, but I also think another takeaway is that judges who have lifetime appointments really need to have more scrutiny and accountability. There needs to be more transparency into what they do, what they're invested in, how they operate, and when they have potential ethics violations.

      Sharyl (on-camera): The Wall Street Journal says that after their reporting, 70 of the judges told court clerks to notify both sides in 700 previous lawsuits that the judges owned shares of stock involving those who were litigating. If they choose, the parties can try to have their cases reheard by another judge.