The Blubber

May 19, 2022

Disclaimer: The following is a report obtained from public disclosures, and aggregated together. None of it is financial advice, nor necessarily an accurate depiction of the SCOTUS's accounts or trading positions. There are no claims of undermining the court, libel, or irregularity in justices trading and adjudicating. The following is just a report of their trades as they were reported.

Earlier this year, Unusual Whales started a national conversation on whether our (federal) lawmakers in the legislative branch should be allowed to trade individual company stocks. Specifically, our report has been cited by international news agencies and by Congress themselves. The debate is ongoing and we hope Congress chooses a path forward that will build public trust, accountability and increase transparency.

But did you know that the judges on the SCOTUS trade and hold individual company stocks too? Turns out, the federal judicial branch (i.e., all federal court judges) can actively trade.

This is a huge problem. Just last year WSJ reported that over 130 federal judges participated in proceedings where they had a financial conflict of interest. To make matters worse, in contested motions, federal judges would rule in favor of the companies they were invested in.

This report will highlight stock trading by the judicial branch, specifically by SCOTUS justices.

Judicial financial disclosures need an overhaul ASAP

Compared to the legislative branch, the current financial disclosures process in the judicial branch is horrendous. If members of the public want access to a specific judge or staff member’s filings, they must send in a paper form to request it. In the past, this has taken months to process and even more time to return the final documents. Furthermore, disclosures are filed annually, unlike Congress which is required to file within 45 days of making a transaction. Many voices have pressured Congress to impose stricter financial disclosure requirements on the judicial branch.

Recently, the judicial branch has buckled under public pressure and made incremental amendments to their disclosure procedures. Now, judicidual annual filings can be released immediately to the public. However, as Reuters notes, the filings are still subject to review by judges prior to release (and this could take months for them to get around to it), and the Administrative Office of the U.S. Courts doesn’t even have an electronic database or system to post them to.  

For this report, we scraped 2019 and 2020 SCOTUS justices’ financial disclosures. You can look through them yourselves: here. For earlier filings that were unscrapable, we used Court Listener’s financial disclosure database.

After working with SCOTUS financial disclosures for this report, we fully support Congress drafting up stricter requirements that would increase public trust and make this data more accessible. Unusualwhales.com is willing to be part of that change. You will see why this is necessary in the report below.

SCOTUS building wealthy retirement funds

By using the minimum values disclosed for assets and transactions, we can generate a conservative estimate of each judge’s wealth. As of the latest data released in 2020, Chief Justice Roberts was the richest individual on the court, followed by Justice Stephen Breyer who retired earlier this year.

Based on their 2020 disclosures, the majority of SCOTUS assets and transactions were in tax-advantaged retirement accounts (i.e., IRA, 401k, 403b). This was true for most justices except Justice Samuel Alito, who has several investment accounts trading stocks, and Justice Brett Kavanaugh, whose reported financial assets included a personal bank account containing no more than $50,000 and a retirement account with less than $15,000 in it.

Chief Stock Trader Roberts

To determine each judge’s trading activity, we counted the number and value of buy and sell transactions over the years.

In 2020, Justice Neil Gorsuch disclosed making the most trades (187) in ETFs and funds. This was followed by Chief Justice Roberts with 152 trades with a quarter of those in stocks.

The following chart shows disclosed trades over time going back to 2015. We can see Roberts being the most active trader (by number of trades) throughout the years.

Turns out the majority of disclosed trades by all judges were in ETFs and index funds. Only 11% of all trades were in company stocks. Chief Justice Roberts, Justice Alito and now-retired Justice Breyer were the only judges on the high court to have disclosed stock trading in 2020.

By comparing the number of buy-to-sell transactions, we can see a sharp shift in Chief Justice Roberts’ trading behaviour. Specifically, the shift from heavily buying to more selling in 2020. Taking a closer look at his 2020 disclosure, it appears his portfolio had a huge sell-off in February 2020 when the market crashed due to the global pandemic. It will be interesting to see how his 2021 disclosure compares. Meanwhile, trades by Justices Gorsuch, Alito and Sotomayor have leaned more towards buying than selling in 2020.

Not only did Chief Justice Roberts and Justice Gorsuch trade the most by number of trades, but also by total value of those trades. Interestingly, along with being the poorest Supreme Court Justice, Brett Kavanaugh has not participated in the stock market at all.

Reporting gains

There is one thing that the judicial branch does better than Congress in their financial disclosures: filings are required to report the actual gains made (as a range).

Charting 2020 gains reveals Justice Breyer making huge gains from his Pearson plc ($PSO) investment. He also made generous bank on Raytheon Technologies spin-offs, Otis Worldwide Corp ($OTIS) and Carrier Global Corp ($CARR). Breyer and Alito picked up $OTIS and $CARR stocks from United Technologies Corp’s change to Raytheon ($RTX) in April of that year. Both stock traders fully sold off their holdings of both spin-offs shortly after receiving them. Justice Breyer reported having up to $100k invested in RTX in 2020.

The following chart shows all stock trades made in 2020 including Chief Justice Roberts’ many stock sales in different industries (reported to have under $1K in gains).

A history of conflict

As stated previously, federal judges have sat on proceedings where they have had a financial conflict on interest. There have been several cases of this happening on the SCOTUS.

Chief Justice John G. Roberts

In 2015, Chief Justice Roberts participated in a deposition involving Texas Instruments while owning stocks in the company. He should have recused himself.

This wasn’t the first time Roberts participated in cases where he was in financial conflict. Prior to joining the high court, Roberts’ participated in proceedings where Microsoft was involved while holding its stock (2005).

Interestingly, on February 14, 2020 – one week before the stock market crashed – Roberts sold up to $1M in stocks and $300K in mutual funds. His only transaction before this sell off was loading up on treasuries ($FTIXX) on January 27, 2020. These two moves taken together seem unusual, however it isn’t abnormal for folks near retirement to de-risk their retirement investments.

Justice Stephen G. Breyer (retired)

In 2015, Justice Breyer participated in a case involving Johnson Controls Inc. subsidiary company, while his wife owned the company’s stock. The Breyer family sold off 750 shares from parent company Johnson one day after the justice had already heard oral arguments and after news broke.

Justice Samuel Alito

In 2009, Justice Alito participated in a broadcasting case involving ABC. His family owned Walt Disney stocks at the time. Disney owns ABC.

More recently, Alito was with the conservative majority 5-4 against President Biden’s COVID vaccination and testing mandates in Biden v. Missouri (2022). The ruling means that the HHS cannot enforce vaccine-or-test requirements on private businesses that participate in Medicare and Medicaid. As of 2020, Alito was holding several pharmaceutical company stocks that have profited from the pandemic including: 3M, Abbvie, Abbott Labs, Becton Dickinson and Johnson & Johnson. Unfortunately, we won’t know whether he has divested from these companies in 2022 until 2023.

Public opinion of SCOTUS is bad and getting worse

All eyes are on SCOTUS this summer as it levels monumental decisions that will affect American society as we know it. It seems with the unprecedented leak, SCOTUS public relations will need to do serious work to build trust and rapport with the public as a trustworthy institution.

Reports from earlier this year have noted that the public’s opinion of SCOTUS was negative. Chief Justice Roberts noted in SCOTUS’s 2021 Year-End Report that revamping financial disclosures was a top priority for them. As noted earlier, they’ve started to make changes, but they don’t go far enough. More stringent financial disclosure requirements, such as banning stock trading and implementing blind trusts which have been proposed by Congress, are a likely discussion, and should be considered if deemed appropriate.

All three branches of government should strive to be as conflict-free and trustworthy as possible. The public deserves it. Those in power should be making decisions that benefit all of society, and not their personal financial portfolios.

The ball is in SCOTUS’s court and here at Unusual Whales, we are excited to see how they will increase transparency and accountability. Follow along with us on Discord or Twitter!

Feel free to dig into SCOTUS 2019-2020 financial disclosures that we’ve scraped at https://unusualwhales.com/i_am_the_senate/judges