Dr. Adriana Kugler, member of the Board of Governors of the Federal Reserve, speaks to The Economic Club of New York in New York City, U.S., June 5, 2025. REUTERS/Kylie Cooper/File Photo

By Michael S. Derby

NEW YORK (Reuters) -Former Federal Reserve Governor Adriana Kugler, who abruptly resigned this summer, had multiple financial transactions in violation of the central bank's ethics rules, government filings showed on Saturday, with the matter referred to the Fed’s in-house watchdog for investigation.

Kugler in late July had sought a waiver to deal with investing rules transgressions by her spouse - including trades in individual stocks and other transactions around Fed policy meetings - and was denied, a Fed official said.

She did not attend the July 30-31 interest-rate-setting Federal Open Market Committee meeting and announced her resignation the following day, August 1.

Kugler, who had joined the Fed in 2023, first saw issues emerge last year when she reported purchases of stock, including Apple and Southwest Airlines, by her spouse that were forbidden under central bank rules governing investing activity of members as well as their families.

Kugler and a law firm she listed on her disclosure form for “pro bono” services did not immediately respond to inquiries from Reuters.

A document made public Saturday by the Office of Government Ethics flagged more problems. It detailed trades that happened on or around FOMC meetings, in violation of rules that prohibit such investing. Other trades included direct purchases of stocks, which is also not allowed.

Kugler’s trading activity has been referred to the central bank’s Inspector General, while her final financial disclosure form was not certified by the Fed’s ethics officer, an unusual development.

The Saturday filing noted that Kugler tied the trading issues to her spouse and said “her spouse did not intend to violate any rules or policies.”

A spokesperson for the Fed’s Inspector General said “we received a referral from the Board’s Ethics Section regarding certain matters related to this filing. We have opened an investigation and, consistent with our practice, we are unable to comment further until our investigation is closed.”

Kugler’s challenges first emerged in October 2024, in a filing that noted forbidden purchases of Apple and Cava Group Inc. stock by her spouse in 2024. A document in January noted the sale of those prohibited securities later that year.

ETHICS ISSUES

Kugler’s financial trading activity is the latest challenge for a central bank that has for several years worked to shore up confidence that its officials are setting policy in the public interest. In late 2021 two regional Fed bank chiefs resigned after disclosures showed active trading in markets while helping set monetary policy.

The Fed swiftly imposed rules sharply limiting what officials and family members could invest in and when they could move money around. Several regional Fed officials, including current Atlanta Fed President Raphael Bostic, have faced critical Inspector General reports regarding their investments, while even Fed Chair Jerome Powell has had his investment activities looked at by the watchdog.

A Fed official said Kugler had received additional ethics training after the initial report of investing that broke Fed rules, beyond regular training. The spokesperson said the matter was referred to the IG in January.

Kugler’s unexpected exit came with important implications for the Fed and its conduct of monetary policy. The unexpired part of the term she was holding as governor was filled by Stephen Miran, an economic adviser to President Donald Trump.

In his time at the Fed he has aggressively pushed for interest rate cuts not favored by his colleagues, and his position has unsettled many Fed watchers, as the new governor is on leave from the White House, raising issues of his independence from the political realm.

Some in Congress continue to believe the process of shoring up ethics rules at the Fed is incomplete.

“I’ve long called for stronger ethics rules to prevent improper trading by Fed officials,” Senator Elizabeth Warren, a Democrat, said in a statement. “Congress needs to pass bipartisan legislation to make the Fed more transparent and accountable.”

(Reporting by Michael S. Derby; Editing by Andrea Ricci)