Ex-Fed Governor Kugler Resigns Amid Trading Violations

Adriana Kugler, a former Federal Reserve Governor, resigned unexpectedly amid concerns regarding her trading activities that contravened the central bank’s ethics rules. The resignation, effective August 8, followed her request for a waiver to conduct financial transactions deemed impermissible by the Fed. This situation occurred after Chair Jerome Powell denied her request, leading to an internal investigation by the Fed’s ethics officials.

Background of the Resignation

Kugler announced her resignation publicly on August 1, 2023, shortly after missing a key policy meeting on July 29-30. At that time, the Fed attributed her absence to a “personal matter.” Prior to her resignation, she had faced scrutiny for financial disclosures that failed to comply with Fed rules.

Investigation into Financial Disclosures

Reports revealed that Kugler had engaged in trading activities that violated the Federal Reserve’s ethics guidelines. Specifically, these activities included trading in individual stocks such as Apple Inc., Southwest Airlines, and Cava Group in 2024. The prohibited trades were executed during designated blackout periods surrounding Fed policy meetings.

• Purchase of Cava shares on March 13, 2024, before the March 19-20 meeting.
• Sale of Southwest shares on April 29, 2024, just prior to the April 30-May 1 gathering.

Documents indicated that some trades were carried out without Kugler’s knowledge, as they were executed by her spouse. Nevertheless, these actions raised significant ethical concerns and drew attention from federal watchdogs.

Ethics and Compliance Issues

The Fed’s Ethics Office referred Kugler’s case to the Board’s Inspector General following the submission of her financial disclosures, which she provided after leaving the Fed. These disclosures encompassed financial activity from 2024 and early 2025 and included both annual and periodic transaction reports, as required for top officials.

Previous Violations and Enhanced Regulations

This incident was not isolated; it followed earlier controversies concerning Fed officials’ trading activities in 2020, which prompted stricter regulations. In response, Powell had already implemented enhanced restrictions on trading and investments for senior officials.

• Kugler’s spouse made unauthorized trades of Apple and Cava shares.
• Adherence to new financial disclosure norms post-revelation of previous misconduct by officials.

Senator Elizabeth Warren has voiced support for stricter ethics laws at the Fed, emphasizing the need for transparency and accountability in the central banking system. As a result of Kugler’s resignation, President Donald Trump was able to appoint Stephen Miran to her vacant position, who had been advocating for aggressive interest rate cuts.

The situation surrounding Kugler’s resignation raises significant questions about the integrity and ethical practices within the Federal Reserve. The ongoing investigations are likely to influence future regulations and policies to restore public confidence in the institution.