A former Federal Reserve governor, Adriana Kugler, retired in August 2024 amidst controversy surrounding several stock trades that violated the central bank’s ethics rules. The U.S. Office of Government Ethics released a report detailing these transactions after the Fed referred them to its inspector general earlier in the year.
Kugler disclosed more than a dozen individual stock trades, some of which were made during financial trading “blackout periods” around the time the Federal Reserve’s policymaking committee meets to set interest rates and other monetary policies. Among the companies listed in these transactions were Southwest Airlines, Apple, Caterpillar, and Fortinet. The largest trade was a purchase of Apple stock in April 2024, ranging between $100,000-$250,000.
The Federal Reserve prohibits its officials from investing in individual stocks, bonds, or cryptocurrencies, but allows for diversified investments like mutual funds. They must provide 45 days’ notice of any trade and secure approval for such transactions. Additionally, any trades made in the previous 30 days must be publicly disclosed. Fed officials are also forbidden from engaging in financial transactions during the blackout period around the eight times a year when the Fed’s policymaking committee meets.
Some of the transactions disclosed by Kugler included a sale of Palo Alto Networks stock and a purchase of Cava Group stock in March 2024, both occurring within a week of that month’s Fed meeting. Kugler also disclosed another purchase of Cava Group stock and the sale of Southwest Airlines stock during the blackout period before the Fed meeting in April 2024.
The report noted that some trading activity was carried out by Kugler’s spouse without her knowledge, and she affirmed that her spouse did not intend to violate any rules or policies. In 2022, the Fed implemented new rules to limit its top officials’ ability to invest in financial markets to prevent conflicts of interest.
Kugler, who was appointed to the Fed’s board of governors by former President Joe Biden in September 2023, did not provide a reason for her resignation. She was the first Hispanic Fed governor and returned to the faculty at Georgetown University after stepping down. Stephen Miran, one of President Donald Trump’s economic advisers, was confirmed by the Senate to fill Kugler’s vacated seat on the Federal Reserve’s governing board.
