Fed governor selling off stock that was purchased by a spouse in breach of trading regulations

Federal Reserve Governor Adriana Kugler, recently appointed to the central bank’s seven-member board, has encountered issues with the Fed's updated ethics rules, which restrict trading and investment actions by officials and their families. This summer, her spouse purchased shares in Apple (NASDAQ) and another company without her knowledge, which contravened these guidelines.

According to a government disclosure dated Oct. 24, Kugler disclosed plans to divest shares of Apple and Cava Group that her spouse had acquired. The Fed’s ethics rules, introduced to limit the personal investments of senior officials, require that trades be pre-approved by the bank’s ethics office, covering spouses and minor children as well.

“My spouse made these purchases independently and without my awareness, with no intention of breaking any rules,” Kugler stated in the disclosure. “Upon discovering the transactions, I promptly informed ethics officials, and, following their guidance, I moved to divest these assets in line with (Federal Open Market Committee) ethics policies.”

The four stock transactions occurred during the summer, with each valued between $1,001 and $15,000.

A Fed spokesperson confirmed Kugler’s notification to the ethics office and affirmed her compliance with their directives.

The current Fed ethics policy was established in early 2022 after controversies arose over certain policymakers' personal investment activities. The heads of the Fed’s Boston and Dallas regional banks stepped down in 2021 following reports that their trades posed potential conflicts of interest. Earlier this year, the Fed’s Office of Inspector General (OIG) criticized these officials for creating the appearance of conflicts.

While Fed Chair Jerome Powell and former Vice Chair Richard Clarida were cleared of any misconduct, Atlanta Fed President Raphael Bostic faced scrutiny for breaching previous rules by trading during restricted periods. Although the OIG found no evidence of his using confidential Fed information, it noted the appearance of a conflict of interest. This investigation on Bostic is thought to be the last report on Fed officials' trading activities.

Efforts to refine and ensure adherence to the Fed’s ethics rules remain underway. At the start of this month, the OIG highlighted the bank’s ongoing work to improve disclosure accuracy and compliance.

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.