Former Federal Reserve Official Breached Trading Rules, Disclosures Reveal

Background on the former governor

Adriana D. Kugler, who resigned from her position as a Federal Reserve Board governor in August 2023, has come under scrutiny after recent financial disclosures showed a series of stock transactions that appear to violate the Fed’s strict trading policies.

What the disclosures show

The mandatory Form 4 filings for 2024 list multiple purchases and sales of securities, including sizable positions in Apple Inc. and Southwest Airlines Co.. According to the reports, Kugler bought Apple shares in January and sold a portion of the holding in March, while she increased her stake in Southwest Airlines in February before reducing it in April.

Why the trades raise concerns

The Federal Reserve’s ethics rules prohibit governors and senior officials from engaging in transactions that could create a conflict of interest or give the appearance of using insider information. The timing of Kugler’s trades—coinciding with key policy discussions on technology and transportation sectors—has prompted questions about whether the required pre‑clearance procedures were followed.

Potential repercussions

If investigators determine that the trades breached the Fed’s internal compliance guidelines, Kugler could face a range of sanctions, from a formal reprimand to a potential civil penalty. The Office of the Inspector General (OIG) has opened a preliminary review, and a final decision is expected later this year.

Reactions from policymakers and watchdogs

Several members of Congress have called for greater transparency and stricter enforcement of trading restrictions for former regulators. “Public confidence in our financial system hinges on the integrity of those who once shaped monetary policy,” one senator remarked, urging the Fed to tighten its post‑employment rules.

What comes next?

The OIG’s investigation will assess whether Kugler sought the necessary approvals before executing the trades and whether any undisclosed information influenced her decisions. The outcome could set a precedent for how former Fed officials are monitored after they leave public service.