Reputational Stakes at Play
In his order, Stearns said federal recusal law requires judges to disqualify themselves in certain circumstances when they or their spouses hold stock in a company tied to a dispute. Even as a nonparty, he said, State Street qualifies as a “material nonparty witness,” and the outcome of the case could ripple into his wife’s financial interests.
The judge added that the allegations place State Street’s reputation squarely on the line, like a referee suddenly becoming part of the scoreboard.
“State Street has a reputational interest in any determination that might suggest that it failed to exercise due diligence in properly evaluating the stock sold by BDO to the ESOP,” Stearns wrote.
Case Reassigned After Recusal
Following the ESOP BDO judge exit, the case was reassigned to U.S. District Judge Denise J. Casper, with U.S. Magistrate Judge Donald L. Cabell designated should the matter be referred.
Representatives for BDO and the proposed class declined to comment Monday.
