Kugler's Departure Sheds Light on Weaknesses in Federal Reserve's Ethics Supervision

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Kugler's Departure Sheds Light on Weaknesses in Federal Reserve's Ethics Supervision

Bitget-RWA2025/11/15 16:52

By:Bitget-RWA

- Fed's Adriana Kugler resigned after ethics probe revealed her spouse's unauthorized stock purchases violating senior official rules. - Kugler sought but failed to secure a waiver from Powell to rectify violations, leading to her abrupt departure cited as a "personal matter." - OIG is reviewing whether her actions constituted material ethical breaches, following prior 2024 investigations into similar issues. - Case highlights broader Fed ethics challenges, including Bostic's trading scandal and Trump's co

The U.S. Federal Reserve is once again facing an ethics dilemma, as former Board of Governors member Adriana Kugler was subject to an internal investigation for allegedly breaching the central bank’s financial trading policies prior to her sudden departure in August. Details of the ethics inquiry, disclosed in a recent report from the Fed’s Office of Government Ethics,

draws attention to increasing examination

of top officials’ adherence to rigorous ethical requirements, especially as political oversight intensifies.

Kugler's Departure Sheds Light on Weaknesses in Federal Reserve's Ethics Supervision image 0

Kugler stepped down after the Fed’s ethics division refused to approve her financial disclosure forms, which listed transactions that seemed to violate internal regulations.

The report states

, Kugler’s husband made four stock purchases—Apple Inc. and Cava Group Inc.—without her awareness. Kugler maintained that her spouse had no intention of breaking any rules, but

these trades went against the Fed’s ban

on individual stock acquisitions by senior officials or their immediate family members.

The ethics review intensified when Kugler requested an exemption from Fed Chair Jerome Powell to resolve the improper holdings, but Powell rejected her appeal.

A representative from the Fed stated

that Kugler’s resignation came after she was unable to obtain the waiver, which would have permitted her to address the violations. Her exit was sudden and initially unexplained, with

the Fed attributing her absence to a "personal matter"

during a policy meeting in July.

The Office of Government Ethics has forwarded the case to the Fed’s independent Office of Inspector General (OIG) for additional examination.

The OIG, which had previously looked into

Kugler for related concerns in 2024, is now responsible for determining if her conduct amounted to a significant breach of ethical standards. Although the Fed’s ethics office acknowledged that Kugler’s spouse acted independently, the broader consequences for her role remain uncertain.

Kugler’s situation is the latest in a string of notable ethics issues at the Fed.

Earlier this year

, Atlanta Fed President Raphael Bostic stepped down following a controversy over undisclosed trades. In a separate matter,

former President Donald Trump’s contentious effort

to oust Fed Governor Lisa Cook due to unrelated mortgage fraud accusations has also challenged the central bank’s autonomy. These episodes highlight ongoing worries about transparency and accountability at an institution historically regarded as a model of impartial economic management.

The Fed’s inspector general has not yet published the results of its investigation into Kugler’s actions. Meanwhile, the central bank is under growing pressure to strengthen its ethical frameworks and rebuild trust in its leadership.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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