Ex-Fed governor Kugler under scrutiny for banned trades in Apple, Caterpillar and other stocks before FOMC decisions

Multiple stock purchases, including Apple and Caterpillar, occurred during restricted blackout periods in 2024. (Image credit: Bloomberg)

A report released Saturday by the US Office of Government Ethics shows that former Federal Reserve Board governor Adriana D. Kugler made, or had made on her behalf, multiple securities transactions in 2024 that ran counter to the central bank’s trading rules. The findings come three months after her unexpected resignation from the Fed’s Board of Governors.

The report, highlighted by CNBC, points to trades in Apple, Southwest Airlines, Caterpillar, and Cava Group. Several of these transactions took place during the Fed’s blackout periods, the restricted windows before and after Federal Open Market Committee (FOMC) meetings, where senior officials are barred from trading.

Why the trades triggered scrutiny

Kugler’s September 11 financial disclosure listed two types of violations:

• Purchases of individual stocks, which the Fed banned in 2022.

Officials are expected to invest only in diversified funds.

• Trades executed during blackout periods tied to FOMC meetings.

These restrictions exist because rate decisions can move markets sharply.

Blackout violations are taken seriously because they intersect directly with monetary policy timing.

Kugler says her husband executed the trades

In the filing, Kugler noted that the transactions were carried out by her spouse without her knowledge, and that he did not intend to breach any rules, a point reiterated in a note cited by CNBC.

The explanation aligns with the Fed’s policy that household transactions are covered under the same rules, regardless of intent or who initiated the trade.

Ethics officials escalated the matter earlier this year

According to CNBC, one entry on the disclosure states that the matter was referred to the Office of Inspector General (OIG) for the Federal Reserve Board earlier this year.

The OIG reviews potential ethics lapses and handles internal investigations.

Another disclosure notes that Kugler received over USD 41,000 in pro bono legal services from the law firm Arnold & Porter.

Kugler joined the Fed in September 2023 and resigned less than a year later. The trading disclosures do not explicitly link her exit to the violations, but the timing,  and the ethics office’s decision to decline certifying her report on October 10, adds context to her early departure.

The Fed tightened its trading rules in 2022 following controversy around officials who traded during the early months of the Covid-19 turmoil.