April 27, 1995
Digest: A full-time judge may not belong to an investment club that is organized as a partnership for profit.
Rule: 22 NYCRR 100.5(c)(2)
A full-time judge asks whether he or she can belong to an investment club whose members pool $50.00 per month to make investments, and who meet monthly to discuss investments. The group is organized as a partnership requiring an initial investment of $50.00 per person. It is organized for profit and for helping women to understand investing.
The judge acknowledges that the Rules of the Chief Administrator bar participation in a partnership organized for profit (22 NYCRR 100.5[c]), but asks whether the club might constitute an exception to the Rule. The judge asks the Committee to view the club in the same light as the situation described in Opinion 90-101, Vol. VI. In that opinion, the Committee advised that a recently elected full-time judge who owned and managed two small rental investment properties prior to becoming a judge could continue to own and manage the properties. The Committee reasoned that a contrary construction of the Rule would make it impossible for a judge who owns a two family house and rents one apartment to a tenant, to take care of the rented apartment without hiring a manager.
The Committee finds that the present situation is distinguishable and declines to find that the judge's participation in the club constitutes an exception to the Rules.
The relevant Rule states that “[n]o full-time judge shall ...serve as [a] ... partner ... of any ... partnership ... organized for profit ...”(22 NYCRR 100.5[c]). Although the Committee can construe the language of the Rules broadly, it cannot vary that language when its meaning is plain (see, e.g., Opinion 94-09, Vol. XII). Because the club is a partnership for profit and the judge actively participates in making investment decisions, the Rule bars the judge from participating in it.
Moreover, this matter is not like that presented in Opinion 90-101, Vol VI, supra. Forbidding participation in investment clubs does not unduly restrict judges from investing in or owning property. The judge still is free to invest the judge’s own funds on his or her own behalf. The Committee notes that the judge also is permitted to invest as a limited partner in a limited partnership (22 NYCRR 10.5[c][iii]).