Recent news has surfaced regarding the abrupt resignation of Former Federal Reserve Governor Adriana Kugler, occurring after Chair Jerome Powell refused to permit her a waiver that would address her financial holdings, which were found to be in violation of the central bank’s ethics rules. This information was made known by an individual within the Federal Reserve.
Investigation into Kugler’s Financial Disclosures
Before stepping down in August, Kugler was under scrutiny by the Fed’s internal watchdog in connection to her recent financial disclosures. The Fed’s ethics officials declined to pass Kugler’s latest disclosures, which had been published on the Office of Government Ethics (OGE) website. The OGE also did not certify Kugler’s recently released disclosures. The disclosures unveiled details about financial activity which violated the Fed’s internal ethics rules.
On August 1, Kugler announced that she would be resigning effective August 8. However, she did not provide a reason and was absent from the central bank’s July 29-30 policy meeting due to a “personal matter.” Before that meeting, Kugler had sought permission to make financial transactions that would address what the Fed official described as prohibited financial holdings, but it wasn’t immediately clear which holdings were involved in that request.
Impact on the Federal Reserve Board
This resignation gave President Donald Trump an earlier-than-expected opportunity to fill a slot on the Fed’s board during his intense campaign urging policymakers to significantly lower interest rates. The opening ultimately went to Trump ally, Stephen Miran, who took an unpaid leave of absence from his post as a White House economic adviser and has repeatedly called for rapid rate cuts.
Prohibited Trades
The newly released documents disclosed previously undisclosed trading in individual stocks in 2024, which is prohibited for Fed officials and their immediate family members. The prohibited trades also represented violations for having been executed during blackout periods straddling each policy meeting, during which no transactions are allowed. This included the purchase of shares in companies such as Materialise NV, Southwest Airlines, Cava Group, Apple Inc., and Caterpillar.
Financial Disclosure
The financial disclosure, which was submitted roughly a month after Kugler’s departure, covered calendar years 2024 and 2025 up to her resignation. Top Fed officials are required to submit such disclosures annually and after leaving the central bank, and to report periodic financial transactions.
Previous Violations
In previously released, periodic financial disclosures during 2024, Kugler acknowledged that she had violated Fed investment and trading rules when her spouse completed four purchases of shares of Apple and Cava. Kugler stated that her spouse made the purchases without her knowledge. The shares were later divested, and Kugler was deemed in compliance with applicable laws and regulations.
In 2022, Powell introduced stricter restrictions on investing and trading for policymakers and senior staff at the central bank. This 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.
Senator Elizabeth Warren, a Democrat from Massachusetts who has long called for stricter ethics rules at the central bank, released a statement calling for bipartisan legislation “to make the Fed more transparent and accountable.”
