Trump Judge's Decision Reversed After Wife's Stock Trade Revealed
Traders work on the floor of the New York Stock Exchange during morning trading on June 12, 2024 in New York City. Judge Lewis Liman's wife sold $15,000 of Bank of America stock three months after he dismissed an antitrust case against the bank and 9 others.
A decision made by a Trump-appointed judge has been reversed after an appeals court found that he "almost certainly unknowingly" had a conflict of interest because of his wife.
The 2nd U.S. Circuit Court of Appeals in Manhattan threw out the dismissal of an antitrust lawsuit Tuesday, saying that the trial judge, Judge Lewis Liman, should have been recused from the case because his wife's stock ownership created an "appearance of impropriety."
Liman was nominated by Trump to serve as a U.S. district judge for the Southern District in May 2018 and confirmed by the Senate in December 2019. Newsweek reached out to Liman via email for comment.
The lawsuit, brought by bond investors, accused 10 large banks, including Bank of America, of overcharging them on "odd-lot" trades. Three months after Liman dismissed the case without prejudice in October 2021, his wife sold $15,000 of Bank of America stock. Tuesday's opinion noted that his wife had divested that stock before Liman issued his decision.
A court clerk alerted parties in the case about the conflict shortly after the trade but wrote that the "ownership of stock neither affected nor impacted [Liman's] decisions." The letter mentioned that had Liman known of the stock ownership, it would have required his recusal. It did not state when he learned of the conflict.
"While there was no outright conflict when the district court judge ruled on the merits of this action, we nonetheless conclude that because § 455(a) and our related precedents required pre-judgment disqualification, vacatur is warranted," Tuesday's unsigned opinion stated.
"We conclude that it is reasonable to question the partiality of a judge presiding over a case in which his spouse holds an ownership interest in a party," the opinion read.
The other banks named in the case include Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest and Wells Fargo.
In Tuesday's opinion, the appeals court warned that these conflicts of interest pose "a legitimate risk" to "the public's confidence in the judicial process."
A few days after Liman notified parties of the conflict, a Wall Street Journal investigation found that more than 130 federal judges had violated federal law and judicial ethics by presiding over cases that posed stock-related conflicts of interest. The article specifically discussed Liman's failure to recuse himself.
A day after the story was published, the case was reassigned to Judge Valerie Caproni.
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