Adriana Kugler testifies before a Senate Banking Committee hearing on her nomination to be a member of the Federal Reserve Board of Governors, on Capitol Hill in Washington, U.S., June 21, 2023.
Jonathan Ernst | Reuters
Former Federal Reserve Board Gov. Adriana Kugler, in 2024, broke the central bank’s rules regarding stock trading, according to a report released Saturday by the U.S. Government Ethics Office.
The report comes three months after Kugler abruptly, and mysteriously, resigned from the Fed’s Board of Governors. Kugler joined the Fed in September 2023.
A financial disclosure report that Kugler filed on Sept. 11 — which contains details of securities transactions by either her or her husband — notes that Ethics Office officials declined to certify the report on Oct. 10.
A note on the disclosure from an Ethics official says “matters related to this disclosure were referred earlier this year” by the office to the independent Office of Inspector General for the Board of Governors of the Federal Reserve System. An inspector general is an internal ethics watchdog for federal departments and agencies.
Another note on the report says, “Consistent with her September 15, 2024, disclosure, 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.”
The disclosure shows two kinds of violations of Fed rules regarding financial transactions by senior officials at the central bank: purchases of stocks of individual companies, as opposed to mutual funds; and purchases of securities during so-called “blackout periods” leading up to and after meetings of the Federal Open Market Committee.
The FOMC meetings set key interest rates. Speculation about those meetings and their actual outcome can significantly affect the prices of stocks and bonds.
Kugler participated in FOMC meetings during her tenure at the Fed. But she missed the FOMC’s meeting this past July due to what the Fed said was a personal matter.
Kugler’s violations were related to purchases of stock in companies including Apple, Southwest Airlines, Caterpillar and Cava Group.
In early 2022, the Fed adopted new rules that banned officials from trading in individual stocks and bonds, as well as cryptocurrencies. The move came after revelations that several senior Fed officials had traded stocks and stock funds shortly before the central bank adopted broad measures to support the U.S. economy during the first weeks of the Covid-19 pandemic.
The report also discloses that Kugler received more than $41,000 worth of “pro bono legal services” from the law firm Arnold & Porter. Pro Bono means for 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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