Money Rehab with Nicole Lapin - The Supreme Court’s Conflict of Interest Problem

Episode Date: April 10, 2023

Supreme Court Justice Clarence Thomas made headlines when it was revealed that he had not disclosed his luxury vacations with Republican donor Harlan Crow. But this is just the tip of the conflict of interest iceberg for the Supreme Court. Nicole breaks down the truly shocking ethical blindspot woven into America's legal system and how it affects our rights. Check out where your representatives are investing here: https://efdsearch.senate.gov/search/home/

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. it's time for some money rehab. Last week, Supreme Court Justice Clarence Thomas made headlines, and this time it's not for a controversial Supreme Court decision. No, this time he made waves following the publication of an article that revealed that he's been taking luxury vacations with a billionaire Republican donor for years,

and it was not disclosed. The reason people are so unsettled by this report is because there are ethics guidelines for Supreme Court justices around not accepting gifts, because gifts open the door for bigger gifts, which open the door for bribery. And these luxury vacations have been pretty sweet gifts. The Republican donor and Thomas's apparent BFF is Harlan Crowe, legacy real estate developer. Thomas and his wife joined Crowe and other VIP conservative thought leaders on lavish trips to California, Indonesia, and New Zealand, which allegedly included stays on Crow's superyacht and properties owned by Crow or his companies. So yeah, accepting these luxury vacation invites presents an ethical problem. But in my opinion, being associated with Harlan Crow himself

is an ethical problem too. Crow is a collector of historical artifacts, including Nazi memorabilia. He owns some of Hitler's paintings and a signed copy of Mein Kampf. It's despicable to laud a collection of Nazi artifacts and to try to explain it away by claiming that you're just a collector of history is frankly pathetic. As a Jewish person myself, it simply terrifies me to know that someone who is charged with protecting my rights as an American is cozying up on a super yacht to someone who owns the instruction manual for the movement that took my people's rights and lives away. I want to do a deep dive into this today because, believe it or not, there are actually more severe ways Supreme Court decisions can be affected by money. And just to really put a fine point on this,

these are the Supreme Court cases that decide things like who can get married, who can exercise autonomy over their bodies, and where concealed weapons can be carried. We should be concerned about our Supreme Court justices showing up not just on super yachts, but in the stock market, because Supreme Court rulings have had extreme impacts on the value of certain stocks. Let's take a look at Roe v. Wade, for example, which, as we all remember, was the landmark Supreme Court decision giving women the right to abortion access, which was overturned last year. So how did the reversal of Roe v. Wade impact the stock value of pharmaceutical companies? Well, bluntly, it was like filling

their financial tanks with rocket fuel. As soon as the decision to overturn Roe went public on June 24, 2022, women began stocking up both on long-term and emergency contraceptive pills. With abortion banned now in over a dozen states, plus heightened concern nationwide about the accessibility of reproductive health care, the demand for contraceptives is on the rise. And so are the stocks of the companies that make them. Evofem Biosciences, the company that makes contraceptive gel Fexi, saw its share value more than double directly following the Supreme Court decision, according to CNN Business.

What about Supreme Court decisions on gun laws? How do they impact gun manufacturers, you might ask? Well, according to Forbes, the value of gun stocks usually rises when stricter gun laws are brought into political discussions. Investors anticipate the demand for guns to spike if regulations are tightened. For some reason, gun manufacturers also usually see their share prices go up in the wake of mass shootings. In another landmark decision last year, the Supreme Court ruled to expand gun rights, eliminating a long-held concealed carry restriction in New York, and gun stocks soared as well. So it seems the hostile political divide on guns is great for gun business either way. Of course, stock prices always fluctuate, but the effect of Supreme Court decisions on the stock market certainly

begs the question, who is getting rich from these major decisions that affect the health and safety of so many people? And are the financial interests of these decision makers being watched closely enough? So the obvious first question here is, can Supreme Court justices invest in the market? And if they can, wouldn't that be a huge conflict of interest? Aren't there rules about this? Well, buckle up, because yes, even though there is a code of conduct for federal judges in the United States, Supreme Court justices are the only federal judges who are exempt from these rules. Supreme Court justices can and do invest in the stock market. Two of the nine Supreme Court justices invest in individual companies, Chief Justice

John Roberts and Justice Samuel Alito. Last year, it was reported that they, along with now-retired Stephen Breyer, have direct ownership interests in 40 publicly traded companies, many of which frequently appear before the court. Supreme Court justices are expected to recuse themselves from a decision where there might be a conflict of interest. We saw this happen with the newest Supreme Court Justice, Katonji Brown Jackson, who recused herself from a Harvard affirmative action case because she sits on Harvard's board of overseers. However, as Louis Varelli, a law professor at Stenson University notes, quote, there is no way to hold a justice directly accountable for a failure to recuse, and there has never been. And the stakes are higher and more complicated when a Supreme Court justice recuses themselves

from a case. In a lower court, if you're a judge and you recuse yourself, you're simply replaced by another judge. Simple. However, if you recuse yourself as a Supreme Court justice, you are not replaced. So if you do recuse yourself, you are dramatically changing the political composition of the group that will make the Supreme Court decision. This is extremely consequential when the Supreme Court case is around a partisan topic. Let's expand our focus for a bit. Even for federal judges that are not Supreme Court justices, the ones who do need to comply with the code of conduct, the rules are not so clear. According to this the code of conduct, the rules are not so clear. According to this infamous code of conduct, United States judges, with the exception of Supreme Court justices, are required to disqualify themselves, quote, in a proceeding in which the

judge's impartiality might reasonably be questioned. For instance, when the judge has, quote, financial interest in the subject of the proceeding. The Code of Conduct defines a financial interest as ownership of a legal or equitable interest, however small, or a relationship as a director, advisor, or other active participant in the affairs of a party. However, according to the Code of Conduct, ownership of a mutual fund is not considered a financial interest unless the judge manages the fund. So, to avoid the risk of conflicts of interest, they can divest from individual stocks and invest in mutual funds and diversified investments. But as you may have gathered, the guidelines for what counts as

a financial interest leaves a lot of wiggle room for interpretation. And remember, the judges are the ones who make the call on whether or not to disqualify themselves. Does that sound like a foolproof, watertight, totally reliable system for ensuring our country's judges uphold absolute integrity and fairness? I don't know about you, but I'm not convinced. For today's tip, you can take straight to the bank. When it comes to how politicians, not just Supreme Court justices, invest, the waters can get even murkier. To read up on how and where your representatives invest, check out the government database United States Senate Financial Disclosures, which I have linked in the show notes. It hardly takes any time at all to get your Nancy Drew on

and look up your representatives, and you'll have peace of mind knowing that you've done your due diligence on who you're trusting with your dollars and your votes. diligence on who you're trusting with your dollars and your votes. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important investment you can make.