Law Prof Says Justices Should Sell Stock

U.S. Supreme Court

Posted May 13, 2008, 12:35 pm CDT
By Debra Cassens Weiss

A law professor has some advice for U.S. Supreme Court justices: Sell your sell individual stock holdings and invest in mutual funds.

The advice by Ronald Rotunda of George Mason University is not meant to boost the justices’ financial bottom line. Instead, Rotunda contends his advice would help avoid a repeat of yesterday’s recusals that prevented the Supreme Court from considering an appeal involving the legal rights of apartheid victims.

Rotunda told the Washington Post the justices could sell their stock under a law passed in 2006 that allows judges to defer capital gains on stock sold to avoid conflicts of interest. Three out of four justices who recused themselves from the case apparently did so because they held stock in companies sued for aiding apartheid.

"What judges ought to do is sell their stock and invest in mutual funds," he said.

While Rotunda likes the idea of justices avoiding conflicts by selling stock, he doesn't think they should do so if they have already indicated they will recuse themselves in a specific case. Theoretically, he says, a judge could sell a company's stock to cure a conflict, then rule in the company's case, and then buy back the stock at a lower price, ABAJournal.com noted in a prior post.

A New York Times story recounts other recent instances of justices’ recusals that were apparently motivated by stock holdings.

Chief Justice John G. Roberts Jr. did not participate in a case that asks whether companies may be sued for damages caused by medical drugs that received federal approval, leaving a 4-4 split. He owned stock in the parent company of one of the litigants.

Justice Samuel A. Alito Jr. has recused himself from a punitive damages case against the Exxon Valdez, raising the possibility of another tie vote.

Updated at 2:44 p.m. to include link and reference to prior coverage.

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Posted by msg - 2 months, 1 week, 6 hours, 52 minutes ago

I couldn’t agree more. Just like the president of the US has to put all his assets in a blind trust when he is in office; the SC justices ought to at least have to divest themselves of stock in companies that could otherwise come before them which is potential any company in the US or internationally doing business in the US. They have to find a way to prevent a recusal situation like the one that just happened and one way is to put their holdings in mutual funds atleast while they are on the bench or do what the president does; put their holdings in a blind trust where they have no control while they are in office. I know it is a lifetime appointment so the mutual fund option is probably more appealing.

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