【Text by Yushan Guanjin Studio】
Documents released by the U.S. Office of Government Ethics (OGE) on November 15 show that former Federal Reserve Board member Adriana Kugler disclosed multiple stock transactions in her annual financial disclosure statement that violated Federal Reserve policies, and the matter has been referred to the Office of the Inspector General for investigation.
Kugler announced her resignation on August 1 and submitted the relevant financial disclosure report in September. According to the disclosure documents, these transactions were mainly conducted by her spouse, involving individual stocks such as Apple and Southwest Airlines, which violated the clear Federal Reserve regulations prohibiting senior officials and their families from trading individual stocks. The Federal Reserve ethics officials refused to certify Kugler's compliance with institutional policies.
This is not the first time Kugler has encountered such issues. A year ago, she voluntarily reported four instances of unauthorized trades, stating at the time that they were "accidental" and attributed them to her husband acting without her knowledge. Kugler joined the Federal Reserve in 2023, and after her departure, President Trump had already nominated Stephen Miller, the chief economic advisor, to succeed her remaining term until January 31, 2026. This incident has once again raised concerns about the enforcement of ethical standards among Federal Reserve officials.
Details of the unauthorized trades have been exposed, and the Federal Reserve has initiated an internal investigation.
According to documents released by the U.S. Office of Government Ethics, multiple stock transactions disclosed by Kugler in her 2024 financial disclosure statement violated the Federal Reserve's relevant policy regulations. Disclosure data shows that her spouse purchased multiple individual stocks, including Apple Inc. and Southwest Airlines, between 2023 and 2024. According to current Federal Reserve regulations, members of the Board of Governors and their spouses and minor children are explicitly prohibited from trading individual stocks.
After reviewing Kugler's submitted financial disclosure statements, the Federal Reserve ethics officials found compliance issues with the transactions and therefore refused to certify her compliance with institutional policies, and followed the prescribed procedure to refer the disclosure document to the Office of the Inspector General. As an independent government oversight body, the Office of the Inspector General is responsible for investigating misconduct and policy violations within federal agencies.
According to the Federal Reserve's regulations, all senior officials must submit detailed personal financial disclosure reports annually, fully explaining their sources of income, financial transaction activities, and asset-liability status. This system aims to ensure decision-making transparency, prevent conflicts of interest, and maintain the credibility of monetary policy. Financial disclosure statements must be reviewed and certified by ethics officials; if any violations are found, corresponding investigation and handling procedures will be initiated.
Notably, this is not the first time Kugler has been involved in unauthorized trading issues. About a year before this disclosure was made, Kugler had voluntarily reported four instances of unauthorized trades that violated the Federal Reserve's strengthened rules. At the time, she described these violations as "accidental," claiming that her husband had operated without her knowledge, and she had no intention of violating any regulations. In her statement at the time, Kugler stated that upon learning of the violation, she immediately reported it to the ethics officials and strictly followed instructions to sell the relevant assets at the earliest possible time allowed by the rules.
However, the newly disclosed unauthorized trades indicate that similar issues have occurred afterward. According to insiders, in July, before the Federal Open Market Committee (FOMC) meeting, Kugler realized that new unauthorized trades could prevent her from attending the meeting. To resolve this issue, she requested an exemption from the trading ban from Federal Reserve Chair Powell, but the request was ultimately denied. Kugler thus missed the FOMC meeting in July, and she publicly explained the absence as due to "personal reasons."
The Federal Reserve's trading rules also clearly state that the 10 days preceding an FOMC meeting are a "quiet period," during which officials and their families are strictly prohibited from engaging in any securities trading activities. This regulation aims to prevent insider trading and ensure that monetary policy information is not used for personal financial gain. Violating these regulations not only harms personal reputation but may also affect public trust in the independence and impartiality of the Federal Reserve.
Resignation Background and Policy Evolution, the Federal Reserve's Ethical Standards Continue to Strengthen
Kugler officially announced her resignation from the Federal Reserve Board on August 1, 2024, at which time her annual financial disclosure process was nearing completion. In her resignation statement, she briefly cited "personal reasons" without detailing the specifics. This resignation came about a month after her absence from the July FOMC meeting, and the temporal connection between the two events has sparked widespread attention and speculation in the market.
Kugler joined the Federal Reserve Board in 2023 and became one of the institution's key decision-makers. As a board member, she played an important role in formulating monetary policy, supervising financial institutions, and maintaining financial stability. Her sudden resignation caused some personnel adjustment pressure within the Federal Reserve. Subsequently, then-President Trump quickly nominated Stephen Miller, the chief economic advisor, to take over Kugler's remaining term, which would last until January 31, 2026.
In 2022, following a series of controversies involving senior officials' trading activities, Federal Reserve Chair Powell introduced stricter personal financial transaction policies. These new regulations explicitly prohibit members of the Board of Governors and regional Federal Reserve Bank presidents from purchasing stocks, bonds, funds, cryptocurrencies, and commodities in their personal names.
The scope of the new policy extends beyond the officials themselves and explicitly applies to their spouses and minor children. This comprehensive restriction measure aims to eliminate potential conflicts of interest at the source and ensure that the decisions of Federal Reserve officials are based entirely on economic data and policy objectives, rather than personal financial interests. The background for the introduction of these policies was that several senior Federal Reserve officials resigned in 2021 due to trading controversies, sparking public doubts about the ethical conduct of central bank officials.
According to current regulations, the financial assets that Federal Reserve officials are allowed to hold are mainly limited to diversified investment funds, U.S. Treasury bills, and cash, which are low-risk and non-targeted investment tools. The Federal Reserve's ethics code system also includes strict reporting and review mechanisms. Officials must complete and accurately report all financial transactions and asset holdings within the specified time frame. Ethics officials will conduct a detailed review of each disclosure form to confirm whether there are any violations. If problems are found, appropriate measures will be taken according to the severity of the situation, including requiring corrections, internal investigations, referring to the Office of the Inspector General, or even recommending dismissal.
From the perspective of market impact, while the ethical controversies of Federal Reserve officials are internal management issues, they may indirectly affect public trust and the effectiveness of monetary policy. Investors and the public closely monitor the independence and impartiality of central bank decision-makers, and any event that may affect this trust could potentially impact market confidence. The Federal Reserve has always regarded maintaining institutional credibility as the foundation for effectively fulfilling its responsibilities, and therefore maintains a high level of emphasis on the enforcement of ethical standards.
This article is an exclusive piece by the Observer, and reproduction without permission is prohibited.
Original: https://www.toutiao.com/article/7573632672849838627/
Statement: This article represents the views of the author and is not necessarily endorsed by the platform. Please express your opinion below using the [Upvote/Downvote] buttons.