Nick Pinto of Hell Gate, an online, worker-owned publication focused on local New York City news, wrote a story about Eric Komitee, the federal judge in the Eastern District of NY.
The story adds new insights into a federal judge accused of conflicts, who makes exponentially more money as a stock trader than a judge. As a judge, he makes $243,300 per year. As a stock trader, he makes millions.
Pinto’s story is titled:
This Trump-Appointed Federal Judge Day-Traded Millions in Crypto and Meme Stocks During Work Hours
On some of the days Judge Eric Komitee was apparently day-trading stocks, he was also late to court hearings.
Pinto reported Eric Komitee “traded millions of dollars worth of cryptocurrency and meme stocks, sometimes short-selling stocks and often buying and selling stocks on the same day, including on days when he was late for scheduled hearings, according to financial disclosure forms and court dockets…
“On many of the days he was playing the markets with five- and six-figure trades, Komitee was also doing the daily work of a circuit court judge, presiding over hearings.”
From 2008-2018, Komitee was the general counsel of Viking Global Investors, one of the world’s largest hedge funds. Beginning in 2010, he took on an operational role in the growing company, in addition to his legal role. He had nine people in legal under him and worked hand in hand with the CEO and top strategists in selecting stocks and investing in them.
Judicial financial disclosures allow wide latitude in disclosing ownership interest in a stock or hedge fund. In Komitee’s case, he disclosed he had between $5,000,001 and $25,000,000 in three hedge funds. That means he might have as little as $15 million or as much as $75 million in those three hedge funds.
When he first disclosed his net worth before becoming a judge in 2019, Komitee said he had a net worth of around $60 million.
His 2023 financial disclosure form reports show his net worth is between $22 million and $102 million.
Komitee’s stock trading activity came to light in a court filing brought by Carlos Watson, of OZY Media. Komitee presided over his trial, and a jury found Watson guilty of two conspiracy charges to commit fraud and one count of aggravated identity theft.
Watson argues Komitee should have recused himself because of his financial interests and relationships with four corporations involved in the case.
In his Hell Gate story, Pinto wrote:
“Komitee still has an enormous amount of money (between $16 million and $80 million, per his latest financial disclosure) in funds run by his old employer, Viking Global Investors, and through personal and institutional relationships Komitee built in his old job, Komitee had significant ties to four of the corporations arguably injured by the deceptions that Watson was charged for: Goldman Sachs, Google, JPMorgan Chase, and LiveNation.”
Komitee denied any conflict and dismissed the motion. The case is pending before the 2nd Circuit Court of Appeals.
Short Selling GameStop
Pinto wrote:
“2022 was the year of the GameStop meme stock, a bizarre financial situation in which hordes of individual investors, organized on social media, got together to pump up the value of the stock of the struggling brick-and-mortar video game retailer to create a squeeze on institutional investors who had shorted the stock.
“…. For those who timed their buying and selling correctly, though, the volatility of the GameStop saga was a chance to make money. Komitee bought between $1 million and $2 million dollars of GameStop stock throughout 2022, his disclosure form for that year shows, and sold a roughly similar amount.
“The pattern of Komitee’s trading—with every one of his ten stock buys paired with a sale on the same day—seems to suggest day-trading based on short term market fluctuations rather than a planned investment strategy.
“How did Komitee do on all these trades? We don’t have a full picture, because his financial disclosure forms aren’t fully filled out. For several trades, the column identifying the financial gain Komitee reaped has been left blank…
“On January 5 of 2022, Komitee bought between $50,000 and $100,000 of GameStop stock, and sold an amount of the stock in the same range. The same day, the judge presided over two hearings. One concerned the trial of a person charged in the abuse and neglect of a young autistic man; the other, scheduled for 2:30 p.m. but begun 18 minutes late, according to court records, entailed Komitee sentencing a man to nearly three years in prison.
Selling Short
“In his disclosures, Komitee wrote that “the GameStop position was a short position.”
Most stock traders try to profit from stocks that rise in value. But some, like Komitee, do the opposite—their idea is to profit from stocks that decline in value—through a strategy known as short selling. Short sellers profit when a stock drops, often benefiting from a company’s struggles. Sometimes, they spread negative news to drive prices down.
Short selling is betting that a stock’s price will go down. An investor borrows shares, sells them, and later buys them back to return to the lender. If the price drops, they buy the shares cheaper and keep the profit. But unlike buying stocks, where you can only lose what you invest, short selling has no limit on losses if prices keep rising. Short selling, like gambling, means one person’s gain is another’s loss. It is meant as a strategy for savvy investors to prey on the regular stock investor who is buying stocks for appreciation by outsmarting them by selling them high and hoping the stock goes down.
GameStop Short Sales and Court Dates
Pinto reports:
“On December 5 of 2022, Komitee bought between $100,000 and $250,000 of GameStop stock and sold between $50,000 and $100,000 of it. Komitee labeled the transaction a short sell in his disclosure form, but left the field identifying how much money he made on the trade blank.”
“Also that day, Komitee had a 10 a.m. hearing scheduled to sentence someone who had pled guilty to possession of cocaine with intent to sell. Komitee was a half hour late to the hearing, telling the parties, according to a transcript, “I apologize for keeping everybody this morning. Dealing with a handful of last minute unforeseen and unforeseeable eventualities…”
“On December 16 of 2022, Komitee made between $100,000 and $1,000,000 short-selling GameStop stock, according to his disclosure form. He also presided over three hearings: a gun-possession case, an insurance suit, and a case in which a woman held on Rikers, representing herself pro se , accused City employees of, among other things, throwing her down a flight of stairs while handcuffed.”
Crytpo Investing
Pinto also points out that:
“Judge Komitee traded cryptocurrency, buying between $115,000 and $250,000 of Bitcoin from 2022 and 2023 and selling between $300,000 and $600,000 in the same period. He bought $100,000 to $200,000 of Ethereum in 2022 and sold $50,000 to $100,000 of it the following year.
“On Valentine’s Day of 2022, Komittee sold between $50,000 and $100,000 of Bitcoin. The same day, he held a hearing, originally scheduled for 11 a.m. but rescheduled to 2:30 p.m. due to “an unanticipated change in the Court’s calendar” in the case of a German lawyer, Henning Schwarzkopf, convicted of money laundering….
“On September 19, 2023, Komitee sold between $250,000 and $500,000 worth of Bitcoin, according to his disclosure form. (His profit on the transaction, once again, is left blank on the form.) He also presided over a hearing in a case brought by a putative class of some 100 flight attendants alleging that the largest regional airline in the US is violating labor laws and paying them less than minimum wage. The airline had filed a motion to have the suit dismissed nearly a year before the hearing, which lasted 39 minutes. Komitee didn’t rule on the motion at the hearing, reserving his decision. Fourteen months later, he still has not ruled on the motion and the flight attendant’s lawsuit is stalled in limbo.”
Late Filings
Judge Komitee has been late filing his disclosure reports almost every year he has sat on the bench. He was more than a year late once.
Pinto asks a final question:
“What sort of trading has Komitee been up to since 2023? He’s supposed to file a new report in May. If, as he did last year, he waits until July to file his report, his disclosure once again won’t be available until October.”
