Former Fed Gov. Adriana Kugler violated ethics rules with stock trades
Adriana Kugler testifies at a Senate Banking Committee hearing on her candidacy for a seat on the Federal Reserve Board of Governors on Capitol Hill in Washington, U.S., on June 21, 2023.
Jonathan Ernst | Reuters
Former Federal Reserve Board Chairman Adriana Kugler broke the central bank’s rules on stock trading in 2024, according to a report released Saturday. U.S. Government Ethics Office.
The report comes three months after Kugler suddenly and mysteriously resigned from the Fed Board of Governors. Kugler joined the Fed in September 2023.
Kugler’s financial disclosure report filed on Sept. 11, which details securities transactions made by her husband, states that Ethics Office officials refused to approve the report on Oct. 10.
An Ethics official’s note on the disclosure states that “matters related to this disclosure were referred to the Office of the Independent Inspector General of the Board of Governors of the Federal Reserve System by the office earlier this year.” The inspector general is an internal ethics watchdog for federal departments and agencies.
“Consistent with his statement dated September 15, 2024, certain business activities were conducted by Dr. Kugler’s spouse without Dr. Kugler’s knowledge, and he confirmed that his spouse did not intend to violate any rules or policies,” another note in the report said.
The statement cited two types of violations of Fed rules on financial transactions by top officials at the central bank: purchasing shares of individual companies as opposed to investment funds; and purchases of securities during the so-called “downtime periods“Before and after meetings Federal Open Market Committee.
FOMC meetings set key interest rates. These meetings and speculation about their actual outcomes can significantly affect stock and bond prices.
Kugler attended FOMC meetings during his tenure at the Fed.
Kugler’s violations involved stock purchases in companies including: Apple, Southwest Airlines, Caterpillar And Javanese Group.
In early 2022, the Fed adopted new rules that ban authorities from trading individual stocks and bonds, as well as cryptocurrencies. The move comes after it was revealed that several senior Fed officials were trading stocks and equity funds shortly before the central bank adopted broad measures to support the US economy in the early weeks of the Covid-19 pandemic.
The report also states that Kugler received $41,000 worth of “pro bono legal services” from the law firm Arnold & Porter. Pro Bono means free.
CNBC has reached out to the Fed for comment on the report.
— CNBC’s Jeff Cox contributed to this story.
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