On Tuesday, July 2, 2024, Newsweek reported that a federal appeals court in New York reversed a decision made by a Trump-appointed judge due to a conflict of interest in the case.

According to the report, the 2nd U.S. Circuit Court of Appeals in Manhattan threw out Judge Lewis Liman’s dismissal of an antitrust lawsuit brought by bond investors against several large banks. The appeals court found that Liman should have recused himself from the case because his wife owned stock in one of the defendant banks, Bank of America.

Liman, who was nominated by former President Donald Trump to serve as a federal district judge for the Southern District of New York in May 2018 and confirmed by the Senate the following year, had dismissed the investor’s lawsuit against 10 banks in October 2021 without prejudice. However, it was later discovered that just three months after the dismissal, Liman’s wife sold $15,000 worth of Bank of America stock, though the stock was divested before Liman issued his ruling in the case.

Newsweek reported that a court clerk had notified the parties involved in the lawsuit about the potential conflict shortly after Liman’s wife sold the Bank of America stock. However, the clerk indicated that Liman’s decisions had not been affected by the stock ownership. The letter noted that if Liman had been aware of his wife’s stock holding earlier, it would have required his recusal from the case.

In its ruling overturning Liman’s dismissal, the appeals court said that while there was no “outright” conflict when Liman first ruled, federal law and prior court precedents required his disqualification before issuing a judgment due to his wife’s financial interest in one of the defendant parties. The appellate judges also concluded it was reasonable to question a judge’s impartiality when their spouse owns stock in a company involved in the litigation.

The Newsweek report noted that besides Bank of America, the other banks named in the lawsuit being reviewed included Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest, and Wells Fargo. Additionally, the appeals court warned that conflicts of interest like this pose “a legitimate risk” to the public’s confidence in the judicial process.

Just days after notifying the parties about the stock issue, a Wall Street Journal investigation uncovered that over 130 federal judges across the country had violated ethics rules and presided over cases where they held conflicts of interest relating to personal stock holdings. The Journal article specifically discussed Liman’s failure to recuse himself due to his wife’s Bank of America stock.

In light of this news, the antitrust case was then reassigned to a new district court judge, Judge Valerie Caproni, the following day, according to Newsweek.

 

 

Source: Newsweek