Former Fed Gov. Adriana Kugler violated ethics rules with stock trades

Former Federal Reserve Board Gov. Adriana Kugler, in 2024, broke the central bank’s rules regarding stock trading, according to a report released Saturday by the U.S. Government Ethics Office.

The report comes three months after Kugler abruptly and mysteriously resigned from the Fed’s Board of Governors. Kugler joined the Fed in September 2023.

A financial disclosure report that Kugler filed on Sept. 11 — which contains details of securities transactions by either her or her husband — notes that Ethics Office officials declined to certify the report on Oct. 10.

A note on the disclosure from 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.”

The disclosure shows two kinds of violations of Fed rules regarding financial transactions by senior officials at the central bank: purchases of stocks 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.

The FOMC meetings set key interest rates. Speculation about those meetings and their actual outcome can significantly affect the prices of stocks and bonds.

Kugler participated in FOMC meetings during her tenure at the Fed. But she missed the FOMC’s meeting this past July due to what the Fed had said was a personal matter.

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

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

“These four purchases were carried out by my spouse, without my knowledge, and I affirm that my spouse did not intend to violate any rules,” Kugler said at the time. “Upon learning about the purchases, I immediately notified ethics officials, and at their direction, I initiated divestiture of these assets as soon as possible under FOMC ethics policies.”

CNBC has reached out to Kugler and to the Fed for comment on the new Ethics disclosure report, which also discloses that Kugler received more than $41,000 worth of “pro bono legal services” from the law firm Arnold & Porter.

Pro Bono means for free.

After she resigned from the Fed on Aug. 1, Kugler returned to Georgetown University in Washington, D.C., where she is a professor at the McCourt School of Public Policy and Economics.

In early 2022,…