Fed Gov. Kugler Resigned Over Trading Violations

Former Federal Reserve Board Gov. Adriana Kugler last year broke the central bank’s rules barring trading of individual stocks and executing financial transactions close to meetings where interest rates are set, actions that led up to her abrupt resignation, according to a report by the U.S. Office of Government Ethics released Saturday.

Kugler’s resignation came after she requested and was denied a waiver by Chair Jerome Powell on a disclosure form that showed she had impermissible holdings, Fed officials familiar with the matter told CNBC.

A financial disclosure report that Kugler filed with the OGE this year on Sept. 11 — which contains details of securities transactions by either her or her husband — notes that an Ethics Office official declined to certify the report.

In a note on Friday’s disclosure, an Ethics official says, “Matters related to this disclosure were referred earlier this year” by the office to the independent Office of Inspector General for the Board of Governors of the Federal Reserve System. An inspector general is an internal ethics watchdog for federal departments and agencies.

Another note on the report says, “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.”

Her disclosure shows two kinds of violations of Fed rules regarding financial transactions by senior officials at the central bank: purchases of stock shares of individual companies, as opposed to mutual funds; and purchases of securities during so-called “blackout periods” leading up to and after meetings of the Federal Open Market Committee.

Kugler’s violations were related to purchases of stock in companies including Apple, Southwest Airlines, Caterpillar and Cava Group, the report indicates.

Shortly before the July meeting, Kugler requested a waiver of the Ethics disclosure filing deadline to address the issue of impermissible holdings within her investment portfolio, according to Fed officials who spoke with CNBC.

Powell, given the repeated efforts to deal with Kugler’s issues, denied her request for another waiver, which led to her not participating in the FOMC meeting in July.

In another disclosure filed in October 2024, Kugler likewise pointed a finger at her husband Donoso for four stock purchases — three of Apple shares in July that year, and one of Cava shares that September — which violated Fed trading rules.