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Alito rules on case helping his investment funds Original Source Link: (May no longer be active)
http://www.mercurynews.com/mld/mercurynews/news/politics/13085333.htmhttp://www.mercurynews.com/mld/mercurynews/news/politics/13085333.htm
Posted on Fri, Nov. 04, 2005
Alito supporters refute conflict of interest claims
BY ANDREW ZAJAC AND MARK SILVA
Chicago Tribune
WASHINGTON - Supporters of Judge Samuel Alito on Friday vigorously defended his decision to rule on two companies that handle his personal investments, even as senators examine whether the rulings posed a conflict of interest.
Alito, who has been nominated by President Bush to the Supreme Court, owned more than $390,000 in shares of Vanguard Group mutual funds when he ruled in favor of the company as a federal appeals court judge in 2002. Alito also ruled in 1996 on a case involving Smith Barney, another firm handling his investments.
When he won Senate confirmation to the federal appeals court in 1990, Alito vowed in written answers to a Senate questionnaire that he would disqualify himself from "any cases involving the Vanguard companies, the brokerage firm of Smith Barney" and a New York savings and loan.
The White House, now seeking Senate confirmation for Alito's nomination for the seat of retiring Justice Sandra Day O'Connor, initially maintained this week that the federal court computers that assign cases to judges had failed to pick up the conflict in the Vanguard case.
But the White House now also argues that Alito had no conflict of interest in either the Vanguard or Smith Barney cases and did not need to recuse himself, because he stood to make no financial gain no matter how the cases were resolved.
"Leading legal experts have said any indication that there was impropriety with regard to this Vanguard issue or Smith Barney is ridiculous," Steve Schmidt, the White House aide overseeing Alito's confirmation bid, said Friday. "He had no obligation to recuse from a case involving his broker, the same way he'd have no obligation to recuse from a case involving his cell phone provider or electric provider."
That's also what Alito supporters maintained in a conference call with reporters Friday.
The White House dismissed suggestions that the sudden rallying of support for Alito reflects any concern that the issue could become a problem in his confirmation.
Ronald Rotunda, a law professor at George Mason University, told reporters on a call arranged by a conservative activist that Alito did nothing wrong because Vanguard and Smith Barney merely held investments for Alito, and any decision he made would not affect his investments.
Rotunda said Alito probably made his 1990 promises to remove himself "out of an overabundance of caution."
Senators weighing Alito's credentials for the high court are examining these cases but are withholding judgment on any conflicts so far. Senate Minority Whip Dick Durbin, D-Ill., a Judiciary Committee member, has asked staffers to examine the issue.
"Our Judiciary staff is talking to legal ethicists about it ... to examine how serious a conflict it is, whether this rises to a conflict of interest or not," said Joe Shoemaker, Durbin's press secretary. "What we don't want to do is level any accusations without substantiation."
Senators this week set Alito's confirmation hearings to begin Jan. 9. Bush said Friday at a summit in Argentina that while he was disappointed Alito would not be confirmed before Christmas, he was gratified that a date for the hearings had been set.
The Vanguard case involved a woman fighting to reclaim the assets of her late husband's retirement account, which had been frozen by Vanguard after a court ruling in favor of the husband's business partner.
After Alito ruled in Vanguard's favor, the woman complained about the judge's ownership of Vanguard funds, which he had disclosed publicly.
Alito wrote to the chief administrative judge of the appeals court in 2003: "I do not believe that I am required to disqualify myself based on my ownership of the mutual fund shares." But he then removed himself from any post-appeal matters.
The Smith Barney case involved a partnership, including HBO Film Management, formed to make films. Investors sued, alleging the partnership defrauded them in its prospects. Smith Barney was one of its brokers.
Alito and two other judges overturned a district judge's dismissal of the case.
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