A former Federal Reserve governor who retired in August has been found to have engaged in several stock trades in 2024 that violated the central bank’s ethics rules. These transactions were detailed in a report released Saturday by the U.S. Office of Government Ethics, which reviewed Adriana Kugler’s financial disclosures after the Fed referred the matter to its inspector general earlier this year.
Kugler, who unexpectedly stepped down from the Fed board on August 8, disclosed more than a dozen individual stock trades in 2024. Several of these trades were made during financial trading “blackout periods” — times around when the Federal Reserve’s policymaking committee meets to set interest rates and other monetary policies. Among the companies involved were Southwest Airlines, Apple, Caterpillar, and Fortinet.
The largest transaction was a purchase of Apple stock in April 2024, valued between $100,000 and $250,000.
The central bank’s decisions on interest rates and bank regulations can cause significant swings in the prices of stocks, bonds, and other securities. To prevent conflicts of interest, Fed officials must provide 45 days’ notice of any stock trade and secure approval prior to executing them. They are also required to make public notice of any trades made within the previous 30 days.
Importantly, Fed officials are prohibited from engaging in financial transactions during the blackout period — roughly 10 days before a Fed meeting and one day after it ends. These blackout periods occur about eight times a year, coinciding with the Federal Open Market Committee (FOMC) meetings.
Among Kugler’s disclosed trades was a sale of Palo Alto Networks stock valued between $50,000 and $100,000, and a purchase of Cava Group stock for approximately $1,000 to $15,000, both executed within a week of the March 2024 Fed meeting.
She also reported another Cava Group purchase in April, valued between $1,000 and $15,000, and a sale of Southwest Airlines stock ranging from $15,000 to $50,000 during the blackout period before the Fed meeting that began on April 30, 2024.
The report notes that “certain trading activity was carried out by Dr. Kugler’s spouse, without Dr. Kugler’s knowledge,” and she affirms that her spouse did not intend to violate any rules or policies.
In 2022, the Federal Reserve adopted sweeping new rules designed to limit the ability of its top officials to invest in the financial markets. The change aimed to prevent conflicts of interest involving investments that could be affected by Fed policies. This move followed public outcry over questionable trades made by several senior Fed policymakers.
That year, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, acknowledged that many of his financial investments and trades over previous years violated Fed ethics rules. He revised all his financial statements dating back to 2017, explaining that the trades were made by investment managers he did not directly oversee and of which he was unaware.
Adriana Kugler, who did not provide a reason for her resignation, was appointed to the Fed’s seven-member board of governors by former President Joe Biden in September 2023, becoming the first Hispanic Fed governor. Prior to joining the Fed, she was a professor at Georgetown University and served as the U.S. representative to the World Bank. Following her departure from the Fed, Kugler returned to the Georgetown faculty in the fall.
In September, Stephen Miran, a top economic adviser to former President Donald Trump, was confirmed by the Senate to fill the Fed board seat vacated by Kugler.
https://ktar.com/national-news/former-fed-governors-stock-trades-violated-the-central-banks-ethics-rules/5777003/
