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The "Amicus Problem" Returns to the Supreme Court

Though none of the justices owns Microsoft shares (Chief Justice Roberts sold his in Jan. 2016 to vote on cert. in a different Microsoft case), Justice Breyer, according to his most recent disclosure, owns up to $100,000 in Cisco, which signed on to an amicus brief siding with the Redmond-based tech giant.

Justices are required by law to step aside from cases in which a company whose shares they own is a named litigant. But they are not required to recuse when that same company files a brief supporting one side or the other, even though it may look improper to vote on such a case. (Lower court judges, on the other hand, are urged in advisory opinion no. 63 not to rule in these types of suits.)

A victory for Microsoft could positively impact its share price and the price of other tech securities, so intentionally or not (probably not, but it still looks bad), these justices may be profiting from how they vote.

What’s more, the justices are eligible to defer capital gains taxes on stocks they sell in order to sit on a case. So what’s stopping them? Roberts and Breyer both have events in the D.C. area next month – maybe a Supreme Court journalist should ask?

Here are the holdings of the three stock-owning justices as of Dec. 31, 2016:

– Roberts (9 cos.): Hill-Rom Holdings, Hillenbrand, Lam Research, Nokia, Sirius XM, Texas Instruments, Thermo Fisher Scientific, TIME Inc., Time-Warner

– Breyer (11 cos.): ADP, Air Products & Chemical, Applied Analysis, Cintas, Cisco, Fastenal, Lowe’s, Paccar, Pearson, Sysco, UTC

– Alito (29 cos.): 3M, Abbott Labs, Abbvie, AES, Boeing, BHP Biliton, Black Hills, Caterpillar, CDK Global, ConocoPhillips, CR Bard, DowDuPont, Fortis, Jacobs Engineering, Johnson & Johnson, Loccitane, Merck, Molson Coors, Mondelez, OGE Energy, Oracle, Parker Hannifin, Phillips 66, PNC, Procter & Gamble, Schlumberger, Sealed Air, TJ Maxx, UTC

Several other companies whose stocks the justices used to own signed amicus briefs in this case. For example, Roberts sold his Verizon shares in June 2015 and his HP shares in Aug. 2016 (Verizon and HP are on the Cisco brief), and Breyer sold his IBM shares in Jan. 2016 (IBM has its own brief).

Overall, we’re trending in the right direction but not there yet.

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