A recent decision by the 2nd US Circuit Court of Appeals in Manhattan has brought attention to an antitrust lawsuit involving 10 major banks accused of overcharging investors on corporate bonds. The court ruled that the trial judge should have been recused due to a conflict of interest, as his wife owned stock in one of the banks.
The lawsuit, which was initially dismissed by US District Judge Lewis Liman in October 2021, alleged that Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest, and Wells Fargo overcharged bond investors on 'odd-lot' trades, valued at less than $1 million.
The appeals court found that Judge Liman's partiality could reasonably be questioned, given his wife's ownership of Bank of America stock, creating an appearance of impropriety. The decision highlighted the importance of judges being vigilant about financial conflicts, as emphasized by US Supreme Court Chief Justice John Roberts in his 2021 annual report on the judiciary.
Following the revelation of the conflict, the case was reassigned to US District Judge Valerie Caproni, as investors appealed the dismissal. The banks argued that Liman's failure to uncover the conflict did not warrant recusal or the revival of the case. However, the appeals court expressed concerns about similar violations potentially eroding public confidence in the judicial process.
Lawyer George Zelcs, representing the investors, expressed readiness to proceed with the case before Judge Caproni. Meanwhile, Bank of America and the banks' legal representatives did not immediately respond to requests for comment on the matter.
