Key Fed official investigated for breaking stock trading rules.

2 hours ago7 min read

The financial disclosures released this past Saturday revealing that former Federal Reserve Governor Adriana Kugler was referred for investigation earlier this year for allegedly breaking the central bank's stock trading rules sent a tremor through the corridors of Wall Street and Washington. Kugler, appointed by former President Biden in 2023, found herself at the center of an ethics probe, with annual disclosures from the U.S. Office of Government Ethics showing purchases and sales of individual stocks in 2024—including shares of Cava and Southwest Airlines—during the critical 'blackout periods' strictly prohibited for top Fed officials ahead of interest rate decisions.This is not a minor infraction; the Fed’s stringent rules, tightened by Chair Jerome Powell in 2021 following a previous scandal, explicitly ban the buying and selling of individual stocks by officials or their immediate family members and mandate that all investments be held for a minimum of one year to eliminate even the appearance of profiting from insider information. While an endnote suggested some trading was conducted by Kugler’s husband without her knowledge, the core issue remains: the Fed declined to certify that her disclosures complied with its ethics framework, a damning non-endorsement that paints a picture of a governance failure.The timeline is particularly telling; a Fed official confirmed that Kugler requested permission from Powell to deal with prohibited holdings just before the Fed's policy meeting last July, a request that was denied. She was subsequently absent and did not vote at the two-day meeting concluding on July 30, and two days later, she announced her surprise resignation.This sequence provides a stark backdrop for her departure, which opened a vacancy for President Trump to fill, leading to the September appointment of White House economist Stephen Miran to the influential Fed Board. Miran, who has already dissented twice in favor of more aggressive rate cuts, will serve until at least January, injecting a new dynamic into the Fed's delicate balancing act.This episode echoes the 2021 scandal that forced the resignations of two officials and the 2022 departure of the Fed's second-in-command, revealing a persistent vulnerability. The revelations arrive at a critical juncture for the central bank, which is operating under intense scrutiny from a White House publicly demanding lower rates.With Trump expected to announce a new Fed chair by year-end to replace Powell in May, the ongoing legal battle over the attempted firing of Governor Lisa Cook, and the terms of 12 Fed presidents expiring in February, the institution's independence is facing its most significant test in decades. The fact that Atlanta Fed President Raphael Bostic, himself previously investigated over his financial disclosures, announced his retirement ahead of the reappointment process only adds to the perception of an institution in flux, where personal financial conduct is inextricably linked to monumental policy decisions that sway global markets.

#Federal Reserve

#ethics probe

#stock trading

#resignation

#Trump administration

#featured

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