Federal judge favored companies where he owned stock

Judges are supposed to recuse themselves when there's a financial conflict, but Manuel Real, a federal district judge in Los Angeles who has been reprimanded in the past for poor conduct on the bench, apparently issued rulings anyway. As reported by California Watch:

•In 2008, he awarded Microsoft Corp. $746,027 in damages and fees in a copyright infringement case against a computer sales and repair company. At the time, Real held Microsoft stock worth between $15,001 and $50,000, according to his financial disclosures.

•In another 2008 case involving a contract dispute between Atlanta Cancer Care and biotech giant Amgen, Real dismissed the suit against Amgen. Real held between $15,001 and $50,000 of Amgen stock, too, which he transferred to someone else shortly after the case was appealed.

•The following year, Real dismissed a lawsuit against Verizon. After the plaintiff in the case appealed the decision to the 9th U.S. Circuit Court of Appeals, Real bought Verizon stock worth $15,001 to $50,000. The appeals court upheld Real's dismissal, but returned the case to Real for further deliberation. The parties reached an agreement in February 2011, and Real dismissed the case.

In all three cases, share prices rose following Real's ruling or dismissal.

"If a judge is willfully disregarding the disqualification rules, there is precedent for saying he should be disciplined," said Charles Geyh, an expert in judicial ethics who teaches law at Indiana University. "In addition, where judges are not diligent in keeping track of their financial conflicts, where there is a pattern of incompetence, they could also be sanctioned." But Geyh acknowledged that such sanctions are rare, typically occurring only in extreme situations.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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