Ethics Scandal: Feds Officials Face More Trading Restrictions
The Federal Reserve has barred senior officials of the US central bank from purchases of a number of assets, including individual stocks and bonds, under a new set of rules announced Friday by the Federal Open Market Committee, or FOMC.
The latest announcement expands a set of related rules announced in October to include cryptocurrencies to the list of prohibited purchases and applies to Reserve Bank presidents, board members, and first vice presidents, among others. Other prohibited investments include agency securities, commodities and foreign currencies.
The new set of rules, which will become effective May 1, also proscribes trading during periods of increased financial market stress.
Federal Reserve officials are also barred from holding bank stocks and Treasury securities as well as engaging in financial transactions during a blackout period around FOMC meetings.
The blackout period has been extended by a day following every meeting. READ: Dollar Steadies Ahead of Inflation Data, Fed Officials Speak
Starting July 1, senior officials of the Federal Reserve are also expected to offer a 45 days’ non-retractable notice before trading in securities that must be approved, according to the announcement. They must also hold such investments for at least one year.
Previously, the rules that guided personal financial practices for Fed officials were the same as those for other government agencies, although the Fed had supplemental rules that were stricter than those for Congress and other agencies.
However, questions remain about how much back and forth may have occurred over policymakers’ personal trading in a year when markets first cratered then rebounded on the basis of both massive federal fiscal stimulus and an aggressive rescue effort by the Fed.
An investigation by the central bank’s inspector general is ongoing while Democratic Senator Elizabeth Warren has called for a Securities and Exchange Commission probe into Fed officials’ trading activity to determine if any trades in the past violated insider trading rules.
Last week, the Fed, responding to a Freedom of Information Act request by Reuters, said there are about 60 pages of correspondence between its ethics officials and policymakers regarding financial transactions conducted during 2020, but “denied in full” to release the documents, citing exemptions under the Information Act that it said applied in this case.
#Ethics Scandal: Feds Officials Face More Trading Restrictions

