Blackout period stock transactions reveal shortcomings in the Federal Reserve's ethics oversight

Adriana Kugler, a former member of the Federal Reserve Board, breached the central bank’s ethical guidelines by engaging in stock trading during periods when such activity is forbidden, as detailed in a report issued Saturday by the U.S. Office of Government Ethics (OGE). The investigation, initiated after the Fed forwarded Kugler’s financial records to its inspector general earlier this year, describes more than a dozen trades in individual stocks—including purchases of

, , , and Cava Group—conducted in 2024. These transactions took place near the dates of Federal Open Market Committee (FOMC) meetings, a time when Fed officials are prohibited from trading to avoid conflicts of interest .

Kugler’s most significant trade was an Apple stock purchase worth between $100,000 and $250,000 in April 2024, which occurred during the blackout window before the Fed’s April 30–May 1 policy session. Additional trades, such as selling shares of Southwest Airlines and Caterpillar, also happened within restricted periods.

The Federal Reserve’s 2022 ethics policy strictly forbids officials from owning or trading individual stocks, bonds, or cryptocurrencies, instead requiring investments in broad-based funds like mutual funds. Kugler also reported that her spouse made several trades without her awareness, insisting these were not intentional violations .

The OGE’s findings reveal a recurring pattern of rule-breaking. For instance, Kugler’s spouse bought

shares on March 13, 2024—just ahead of the Fed’s March 19–20 meeting—and sold them in April. Similarly, Southwest Airlines stock was acquired in March and sold before the April meeting. These actions coincide with the Fed’s rule that bans trading during blackout intervals, which each FOMC meeting.

Kugler stepped down in August 2024, following several months of unreported compliance breaches, apparently as a result of these infractions. She had requested an exemption from Fed Chair Jerome Powell to alter her portfolio during blackout periods, but her request was denied. Her resignation created an opening on the seven-member Fed board, which was later filled by Stephen Miran, a senior economic adviser to former President Donald Trump

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The Fed’s inspector general is currently examining Kugler’s financial disclosures, following previous investigations into similar misconduct by high-ranking officials. In 2021, Raphael Bostic, then head of the Atlanta Fed, acknowledged violating ethics rules through trades managed by his investment advisors. The 2022 reforms were intended to address such conflicts, but Kugler’s situation highlights ongoing difficulties in enforcing these standards

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Kugler’s financial records also show she received nearly $41,000 in complimentary legal services from Arnold & Porter, a law firm based in Washington, and she resumed her teaching position at Georgetown University soon after leaving the Fed

. The OGE’s decision not to certify her disclosure documents—a standard procedure for federal employees—further complicates her situation, as ethics officials found her trades to be out of compliance with Federal Reserve rules .

With the inspector general’s review still underway, the episode raises concerns about the monitoring of Fed officials’ personal investments. Kugler, who was the first Hispanic member appointed to the Fed board, joined in September 2023 under President Joe Biden. Her exit and the subsequent appointment of Miran underscore the complex relationship between regulatory adherence and political considerations in central bank leadership

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