Fed Ethics Investigation Reveals Trading Violations
A former senior official at the Federal Reserve has become embroiled in an ethics scandal after her husband conducted stock trading activities that breached the central bank's strict rules. According to a newly released government ethics report, Adriana Kugler, who served on the Federal Reserve Board, saw her spouse make multiple stock purchases and sales during prohibited periods.
The Trading Violations Uncovered
The US Office of Government Ethics published a comprehensive report on Saturday detailing how Kugler's husband, Ignacio Donoso, a Maryland-based business immigration lawyer, engaged in trading that violated Federal Reserve policies. The investigation concluded that trades were executed during the central bank's 'blackout period', which spans approximately ten days before Federal Open Market Committee meetings and extends one day after.
Kugler disclosed in September 2024 that her husband had unknowingly committed these violations. The report states: '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 specific violations included selling shares in Apple, Southwest Airlines, and Cava during restricted periods. Investigators found that Kugler purchased Cava shares just one week before a policy meeting in March and sold them in April. She subsequently bought and sold Cava shares two more times by May and purchased Southwest stock in March.
Resignation and Consequences
The ethics findings emerge three months after Kugler unexpectedly submitted her resignation from the Federal Reserve Board. Kugler resigned in August after missing a Federal Open Market Committee meeting in July, with her departure taking effect just one week later.
Kugler had been nominated by President Biden to the Board of Governors in 2023 and confirmed by the Senate that September. Following her resignation, President Trump expressed pleasure at having an open slot on the board and nominated Stephen Miran, one of his economic advisors, as her replacement.
The Federal Reserve implemented stricter trading rules in 2021 when Chair Jerome Powell tightened restrictions on federal officials. These regulations were further strengthened in 2022 to ban officials from trading individual stocks, bonds, and cryptocurrencies. The enhanced rules came after previous ethics controversies involving Fed officials Eric Rosengren and Robert Kaplan.
Kugler has since begun a new position as a professor at Georgetown University's McCourt School of Public Policy and Economics. Both Kugler and the Federal Reserve have been approached for comment regarding the ethics findings.
