Ex-Fed Governor Kugler faced ethics probe before she resigned

Some of the prohibited trades also represented violations for having been executed during blackout periods straddling each policy meeting during which no transactions are allowed.

That included the purchase of Cava shares on March 13, 2024, days ahead of a March 19-20 meeting and the sale of Southwest shares on April 29, 2024, on the eve of the Fed’s April 30-May 1 gathering. The disclosure also lists several fund transactions that fell within blackout periods.

A footnote connected to the Jan. 2, 2024, sale of Materialise NV shares read: “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.”

Kugler, who was appointed to the Fed in September 2023 by President Joe Biden, declined to comment.

Financial Disclosure

In the disclosure released Saturday, Fed ethics official Sean Croston said, “Consistent with our standard practices and policies, matters related to this disclosure were referred earlier this year by the Board’s Ethics Office to the independent Office of Inspector General for the Board of Governors of the Federal Reserve System.”

The financial disclosure, which was submitted roughly a month after Kugler’s departure, covered calendar years 2024 and 2025 through her resignation. Top Fed officials are required to submit disclosures annually and after leaving the central bank, and to report periodic financial transactions.

“Earlier this year we received a referral from the Board’s Ethics Section regarding certain matters related to this filing,” a spokesperson for the Fed’s Office of Inspector General said in a statement. “We have opened an investigation and, consistent with our practice, we are unable to comment further until our investigation is closed.”

Previous Violations

In previously released, periodic financial disclosures during 2024, Kugler acknowledged that she had run afoul of Fed investment and trading rules when her spouse completed four purchases of shares of Apple and Cava.

Those trades violated the central bank’s rules that limit how senior Fed officials, their spouses and minor children invest and trade.

Kugler said her spouse made the purchases without her knowledge. The shares were later divested and Kugler was deemed in compliance with applicable laws and regulations by the Fed’s designated ethics official, according to the disclosures.

Powell introduced tougher restrictions on investing and trading for policymakers and senior staff at the central bank in 2022. That followed revelations of unusual trading activity during 2020 by several senior officials.

Boston Fed President Eric Rosengren and Dallas Fed chief Robert Kaplan each announced their early retirement after the revelations, with Rosengren citing ill health. The Fed’s internal watchdog ultimately cleared the pair of legal wrongdoing, but chastised them for undermining public confidence in the central bank.

The new rules, which the Fed said at the time were aimed at supporting the public’s confidence in the impartiality and integrity of policymakers, boosted financial disclosure requirements, among other measures.

Senator Elizabeth Warren, a Democrat from Massachusetts who has long called for stricter ethics rules at the central bank, released a statement on Saturday calling for bipartisan legislation “to make the Fed more transparent and accountable.”

(Updates with further details from disclosure.)