Fed Governor Resigned Amid Ethics Probe into Prohibited Stock Trades

2 hours ago7 min read3 comments

A formal ethics investigation was launched into former Federal Reserve Governor Adriana Kugler for alleged violations of the central bank's strict stock trading rules, according to financial disclosures released this past Saturday. The probe offers critical context for her sudden resignation in August, which created a vacancy on the Fed's Board of Governors that President Trump moved quickly to fill.Kugler, a 2023 Biden appointee, was investigated after her annual disclosures revealed trades in individual stocks like Cava and Southwest Airlines during designated blackout periods. These windows are intended to prevent officials from trading when they possess non-public information ahead of interest rate decisions.The Fed's ethics rules, strengthened by Chair Jerome Powell after a 2021 scandal, ban such timed trades and generally prohibit the ownership and active trading of individual stocks, requiring investments to be held for at least one year. Kugler's filing included a note suggesting some trades were made by her husband without her knowledge.The situation escalated when Kugler sought, and was denied, permission from Powell to divest prohibited holdings just before a key policy meeting in July. She was notably absent from that meeting and announced her resignation just two days later.The Fed declined to certify that her financial disclosures were in full compliance with its rules, a significant rebuke. Fed ethics official Sean Croston confirmed the matter was referred to an independent watchdog, as per standard procedure.This incident echoes a previous scandal that led to resignations and a regulatory overhaul. The Fed's market-moving power makes the integrity of its officials' personal trading a paramount concern.Politically, the Trump administration has already named White House economist Stephen Miran, an advocate for more aggressive rate cuts, to temporarily fill Kugler's seat. These revelations emerge as the Fed faces intense White House pressure for lower interest rates.A broader leadership transformation is underway, with Trump expected to replace Powell as chair in May, following his controversial firing of Governor Lisa Cook, a move now before the Supreme Court. Furthermore, the terms of a dozen regional Fed presidents expire in February, a process that will test the board's independence. Atlanta Fed President Raphael Bostic, who himself faced a review over his disclosures in 2022, has already announced his retirement ahead of this shakeup, signaling a potential reshaping of the world's most powerful central bank.

#Federal Reserve

#ethics probe

#stock trades

#resignation

#Jerome Powell

#lead focus news

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