On Wednesday, June 3, 2026, Reuters reported that a federal judicial panel approved a rule change aimed at strengthening corporate disclosures to help judges follow recusal obligations when they hold stock in companies appearing before them.

The decision came as the U.S. Judicial Conference’s Committee on Rules of Practice and Procedure met in Chicago and backed a final amendment to Rule 7.1 of the Federal Rules of Civil Procedure. Under the proposal, parties in lawsuits would be required to disclose whether they are directly or indirectly owned by any publicly held business organization, or its parent entity, that has a 10% or greater stake.

The change is intended to improve judges’ ability to identify potential conflicts earlier, including situations involving layered ownership structures that can make financial interests harder to detect.

U.S. District Judge Sarah Vance, who chairs the Advisory Committee on Civil Rules that drafted the rule, said the approach would go beyond a party’s immediate parent company. She described the goal as uncovering ownership extending through “grandparents, great-grandparents, and other entities.”

The rule was prompted by concerns raised in a 2022 letter from U.S. Circuit Judge Ralph Erickson, who warned of conflict-of-interest problems tied to stock he said had affected too many judges. Erickson said some judges invested in Berkshire Hathaway were not informed until late that companies appearing in cases were owned by the conglomerate. He argued that existing disclosure requirements for litigants focus on parent organizations but do not capture ultimate ownership.

Vance said the amendment would also support compliance with 2024 guidance from the Judicial Conference’s Committee on Codes of Conduct, which tightened recusal requirements, particularly for parent-subsidiary relationships.

The proposal now goes to the Judicial Conference for review. It would then proceed to the U.S. Supreme Court, with a submission deadline to Congress of May 1. If Congress does not act, the amended rule would take effect on December 1, 2027.

 

 

Source: Reuters