Adriana Kugler Exited Fed After Ethics Report Cites Stock Trading Violations

Former Federal Reserve Board Governor Adriana Kugler resigned in August after an investigation by the U.S. Office of Government Ethics (OGE) found that her household breached the central bank’s strict trading restrictions, according to a disclosure released on Saturday.

Two Types of Violations Cited

The OGE report identifies purchases of individual company shares and transactions executed during Federal Open Market Committee (FOMC) blackout periods as the principal infractions. Kugler’s disclosure lists trades in Apple, Southwest Airlines, Caterpillar and Cava Group that occurred while she served on the board. Federal Reserve rules adopted in early 2022 bar senior officials from holding individual stocks and from trading shortly before or after FOMC meetings, which set benchmark interest rates.

Kugler, appointed by President Joe Biden, joined the Board of Governors in September 2023. She took part in FOMC deliberations until mid-2024, but she was absent from the committee’s July meeting, officially for “a personal matter.” The newly released records indicate that the absence followed an internal request for an additional waiver to address disallowed holdings. Chair Jerome Powell denied that waiver after earlier extensions had been granted, Federal Reserve officials told CNBC.

Timeline of Internal Review

According to the disclosure, questions about Kugler’s portfolio surfaced as early as September 2024, when she began working with ethics officers to resolve policy breaches. On 15 September 2024 she submitted a disclosure admitting that certain transactions violated Fed rules. An accompanying note from the Ethics Office states that the matter had been referred to the independent Office of Inspector General (OIG) for the Board of Governors.

In the 11 September 2024 financial report released on Saturday, an ethics official declined to certify Kugler’s filing, citing the unresolved issues. A separate note says that “certain trading activity was carried out by Dr. Kugler’s spouse, without Dr. Kugler’s knowledge,” and that her spouse “did not intend to violate any rules or policies.”

Kugler is married to immigration attorney Ignacio Donoso. In a supplemental disclosure submitted in October 2024, she again attributed four trades—three purchases of Apple shares in July and one purchase of Cava shares in September—to her husband. The filing states that she informed ethics officials immediately after learning of the transactions and began divesting the assets as directed.

Resignation and Successor

After Powell rejected her second waiver request, Kugler announced on 1 August 2024 that she would resign effective 8 August. Her departure allowed then-President Donald Trump to designate economist Stephen Miran to serve the remainder of her term on the Board of Governors. Miran subsequently took unpaid leave from his role as chair of the White House Council of Economic Advisors.

Following her exit from the Fed, Kugler returned to Georgetown University’s McCourt School of Public Policy and Economics, where she is a professor.

Additional Findings

The OGE report also discloses that Kugler received more than $41,000 in pro bono legal services from the law firm Arnold & Porter. The filing does not elaborate on the nature of the assistance.

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CNBC reported that attempts to obtain comment from Kugler and Donoso were unsuccessful. The Federal Reserve, citing personnel privacy, has not provided further detail on the OIG referral.

Broader Context of Fed Trading Rules

The Federal Reserve tightened its ethics code in February 2022 after public scrutiny of trades by senior officials early in the COVID-19 pandemic. Former regional presidents Eric Rosengren of Boston and Robert Kaplan of Dallas bought and sold securities as the central bank prepared emergency measures to stabilize financial markets. Both men resigned and were later cleared of legal wrongdoing, yet the episode prompted the sweeping ban on individual stock holdings for policymakers.

Subsequent reviews have identified additional lapses. In 2024, the Fed’s inspector general concluded that Atlanta Fed President Raphael Bostic—who plans to retire in February—also violated trading policies. Though the inspector general found no evidence of intentional misconduct, the report recommended process improvements.

Full details of the Federal Reserve’s investment restrictions are available on the central bank’s ethics page and through the Office of Government Ethics, which oversees compliance for senior federal officials.

Under current rules, governors, presidents of regional banks and senior staff must divest individual stocks, bonds and cryptocurrencies, limit trading to diversified vehicles such as mutual funds, and observe a minimum 30-day holding period for any permitted purchase. In addition, no transactions are allowed during the week preceding or the day following an FOMC meeting.

Crédito da imagem: Jonathan Ernst/Reuters