Adriana Kugler, the former President of the Federal Reserve who stepped down unexpectedly this summer, has been linked to several financial transactions that breached the central bank’s ethics guidelines, according to a government report released on Saturday. This issue has now been referred to the Fed’s internal watchdog for further examination.
Officials at the Fed indicated that Kugler sought a waiver in late July regarding violations tied to her spouse’s investment activities, which included trading individual stocks related to Federal Reserve policy meetings, but the request was denied.
He missed the Federal Open Market Committee meeting on July 30-31 to set interest rates, and the day after the meeting, on August 1, he announced his resignation.
Kugler, who started at the Fed in 2023, initially faced scrutiny last year when he reported his spouse’s stock purchases of companies like Apple and Southwest Airlines—transactions that are not allowed under the Fed’s investment activity rules for members and their families.
Neither Kugler nor the law firm she indicated in her disclosure for pro bono services responded to requests for comments from Reuters.
Documents disclosed on Saturday by the Office of Government Ethics uncovered further concerns, specifically regarding trades made during or close to the FOMC meeting that contravened restrictions on such investments. There were also direct stock purchases that weren’t permitted.
Kugler’s trading activities were flagged to the inspector general of the central bank, yet in an unusual twist, her final financial disclosure was not certified by Fed ethics officials.
In the filing on Saturday, Kugler attributed the transaction issues to her spouse, claiming “the spouse did not intend to violate any rules or policies.”
A representative for the Fed’s inspector general stated: “We’ve received a referral from the Board’s Ethics Section regarding certain matters in this filing. We’ve begun an investigation, but as per our practice, we can’t provide further comments until it’s completed.”
The controversy surrounding Kugler first emerged in October 2024, when a filing highlighted prohibited acquisitions of Apple and Cava Group stocks by her spouse. A subsequent document from January illustrated the sale of these restricted securities that same year.
Kugler’s financial dealings represent yet another hurdle for the Fed, which has been striving for years to enhance public trust that its officials are engaged in policy-making for the common good. Back in late 2021, two regional Fed presidents resigned after revelations showed they were actively trading while involved in monetary policy decisions.
In response, the Fed quickly enacted strict rules that limit what officials and their families can invest in and when. Various regional officials, such as current Atlanta Fed President Rafael Bostic, have also come under fire for their investments, while even Fed Chairman Jerome Powell has had his investment activities scrutinized by the inspector general.
Officials shared that Kugler had received extra ethics training on top of the standard training after initial reports surfaced concerning investment rule violations. A spokesperson noted that the matter was referred to the inspector general back in January.
Kugler’s sudden exit poses significant implications for the Federal Reserve and its policy operations.
President Trump’s economic advisor, Stephen Millan, has taken over the remainder of her term as governor.
During his time at the Fed, he has been an advocate for aggressive rate cuts, a stance that hasn’t sat well with all his colleagues, raising concerns among Fed observers regarding his independence given that the new governor is currently on leave from the White House.
Some congressional members argue that efforts to enhance the Fed’s ethics framework remain unfinished.
“I’ve been calling for tougher ethics regulations to prevent inappropriate trading by Fed officials for years,” remarked Democratic Senator Elizabeth Warren. “It’s crucial for Congress to pass bipartisan legislation that boosts transparency and accountability at the Fed.”
