US judicial panel tightens corporate disclosure rules to ensure judge recusals

Berkshire Hathaway

03/06/2026 21:13

By Nate Raymond

    June 3 (Reuters) - A federal judicial panel on Wednesday approved a rule change designed to help judges comply with their obligations to recuse themselves from cases in which they own stock in the companies appearing before them.
The U.S. Judicial Conference's Committee on Rules of Practice and Procedure, during a meeting in Chicago, approved a final rule designed to address concerns that judges were not being adequately informed that they might have a potential financial interest in cases warranting their recusal.
The panel endorsed amending Rule 7.1 of the Federal Rules of Civil Procedure to require parties in a lawsuit to disclose when they are directly or indirectly owned by any publicly held business organization or parent entity with a stake of 10% or more.
U.S. District Judge Sarah Vance, who chairs the Advisory Committee on Civil Rules, which drafted the rule, said the goal was to reveal not just a party's direct parent company but also "grandparents, great-grandparents, and other entities."
The rule change was spurred by a 2022 letter from U.S. Circuit Judge Ralph Erickson sounding the alarm about a particular stock that he said was causing a conflict-of-interest "nightmare" for too many judges: Berkshire Hathaway.
Erickson, a member of the 8th U.S. Circuit Court of Appeals, said many judges who were invested in Berkshire did not know until too late when a company appearing before them was owned by the conglomerate.
The disclosure statements that companies are currently required to file in court identifying their parent organizations do not cover the parent's ultimate owner, Erickson said.
For example, Orange Julius is owned by International Dairy Queen, a Berkshire subsidiary. Yet Erickson said Orange Julius currently only must disclose IDQ as its parent, not Berkshire.
Vance, a New Orleans-based judge, said the new rule would facilitate compliance with 2024 guidance from the U.S. Judicial Conference's Committee on Codes of Conduct that strengthened the requirements governing recusals by judges involving parent-subsidiary relationships between companies.
The rule change now goes to the Judicial Conference, the judiciary's top policymaking body, for review. It would then go to the U.S. Supreme Court to consider and submit to Congress by May 1. Absent action by Congress, the amended rule would take effect December 1, 2027.
     
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(Reporting by Nate Raymond in Boston)