Former Federal Reserve Governor Adriana Kugler abruptly resigned after Chair Jerome Powell refused to grant her a waiver to address financial holdings that ran afoul of the central bank’s ethics rules, according to a Fed official.
Fed ethics officials declined to certify Kugler’s latest disclosures, which were posted on the website of the Office of Government Ethics, and referred the matter to the board’s inspector general, the document showed. The OGE also declined to certify Kugler’s newly released disclosures.
The disclosures revealed details related to financial activity that violated the Fed’s internal ethics rules.
Ahead of that meeting, Kugler sought permission to conduct financial transactions to address what the Fed official described as impermissible financial holdings. It wasn’t immediately clear which holdings were involved in that request.
According to the official, Kugler asked for a waiver to rules requiring top Fed officials to obtain clearance before conducting certain financial transactions and prohibiting them from trading during so-called blackout periods that straddle their policy meetings. Powell denied the request.
Some of the prohibited trades also represented violations for having been executed during blackout periods straddling each policy meeting during which no transactions are allowed.
That included the purchase of Cava shares on March 13, 2024, days ahead of a March 19-20 meeting and the sale of Southwest shares on April 29, 2024, on the eve of the Fed’s April 30-May 1 gathering. The disclosure also lists several fund transactions that fell within blackout periods.
A footnote connected to the Jan. 2, 2024, sale of Materialise NV shares read: “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.”
Kugler, who was appointed to the Fed in September 2023 by President Joe Biden, declined to comment.
In the disclosure released Saturday, Fed ethics official Sean Croston said, “Consistent with our standard practices and policies, matters related to this disclosure were referred earlier this year by the Board’s Ethics Office to the independent Office of Inspector General for the Board of Governors of the Federal Reserve System.”
The financial disclosure, which was submitted roughly a month after Kugler’s departure, covered calendar years 2024 and 2025 through her resignation. Top Fed officials are required to submit disclosures annually and after leaving the central bank, and to report periodic financial transactions.
“Earlier this year we received a referral from the Board’s Ethics Section regarding certain matters related to this filing,” a spokesperson for the Fed’s Office of Inspector General said in a statement. “We have opened an investigation and, consistent with our practice, we are unable to comment further until our investigation is closed.”
In previously released, periodic financial disclosures during 2024, Kugler acknowledged that she had run afoul of Fed investment and trading rules when her spouse completed four purchases of shares of Apple and Cava.
Those trades violated the central bank’s rules that limit how senior Fed officials, their spouses and minor children invest and trade.
Kugler said her spouse made the purchases without her knowledge. The shares were later divested and Kugler was deemed in compliance with applicable laws and regulations by the Fed’s designated ethics official, according to the disclosures.
The new rules, which the Fed said at the time were aimed at supporting the public’s confidence in the impartiality and integrity of policymakers, boosted financial disclosure requirements, among other measures.
Senator Elizabeth Warren, a Democrat from Massachusetts who has long called for stricter ethics rules at the central bank, released a statement on Saturday calling for bipartisan legislation “to make the Fed more transparent and accountable.”
