It has been revealed that the reason Adriana Kugler, a director at the Federal Reserve (Fed), the Central Bank of the United States, abruptly resigned in Aug. was that she violated numerous ethics rules on financial transaction while in office. The former director carried out dozens of individual stock trades that Fed directors are prohibited from making, and a substantial number of them occurred immediately before or after monetary policy decision meetings.
AP reported on the 16th, citing a financial disclosure released the previous day by the Office of Government Ethics (OGE), that the former director reported more than 12 individual stock transaction in 2024 alone. The transaction list included Apple, Southwest Airlines, heavy equipment maker Caterpillar, and cybersecurity corporations Fortinet. The largest transaction among them was the purchase of Apple shares worth $100,000–$250,000 (about 140 million–350 million won) made in Apr.
This is a transaction that directly violates the Fed's ethics rules that were significantly tightened in 2022. The Fed can cause massive volatility in the prices of securities such as stocks and bonds through interest rate decisions and bank regulation. For this reason, senior Fed officials are completely banned from directly investing in individual stocks, bonds, and cryptocurrencies to prevent conflicts of interest. Even transactions in diversified investment products that are permitted, such as mutual funds, require 45 days' advance notice and approval, and there is also a disclosure obligation within 30 days.
Experts especially criticized that transaction took place during the blackout period around the Federal Open Market Committee (FOMC) meetings that decide currency policy. The Fed strictly bans all board members from financial transaction from about 10 days before an FOMC meeting until the day after the meeting ends. That is when the risk is highest that market-sensitive information could be exposed.
According to the report, the former director sold Palo Alto Networks shares ($50,000–$100,000) and bought Cava Group shares ($1,000–$15,000) at a time just one week before the Mar. FOMC meeting. It also emerged that during the blackout period immediately before the FOMC meeting that began on Apr. 30, she additionally bought Cava Group shares and sold Southwest Airlines shares ($15,000–$50,000).
The former director then resigned after a murky process. She drew questions by skipping the FOMC meeting held on Jul. 29–30. About a week later, on Aug. 8, she abruptly announced her resignation without giving a specific reason. It was just six months before the end of her term (Jan. 31, 2025).
Bloomberg, citing a Fed official, reported that "the former director asked Fed Chair Jerome Powell before the Jul. FOMC to allow certain financial assets transaction to resolve this ethics violation issue." At the time, Powell was said to have rejected the request for immunity. In the end, the Fed's ethics officer referred the matter to the Fed's Office of Inspector General (IG) under internal rules.
In the OGE report, the former director left a note saying "certain transaction activity was conducted by a spouse without my (Kugler's) knowledge" and "I confirm that the spouse had no intention of violating any rules or policies."
The former director was the first Hispanic Fed director and was appointed in Sep. 2023 during the Joe Biden administration. Before joining the Fed board, she was a Georgetown University professor and the U.S. representative at the World Bank. Within the Fed, she was regarded as a representative "hawk" (prefers monetary tightening).
The vacancy created by her resignation was filled by Steven Miron, one of President Donald Trump's top economic advisers and Chairperson of the White House Council of Economic Advisers (CEA), who was appointed after Senate confirmation in Sep. Miron is classified as an "extreme dove" (prefers monetary easing).
Wall Street was abuzz with speculation that a hawk abruptly stepped down and the seat was filled by a dove close to President Trump, interpreting it as an attempt by Trump to "seize control of the Fed."