Federal Reserve Ethics Probe Intensifies as Kugler Resigns Amid Stock Trade Scandal

Former Federal Reserve Governor Adriana Kugler resigned in August 2025. Her departure followed an internal ethics investigation into her family’s stock trading activity. The trades, conducted by her spouse, involved companies directly affected by Fed policy decisions.

The incident has reignited concerns over financial integrity at the highest levels of the US central bank. It underscores the persistent challenge of enforcing conflict-of-interest rules for officials and their families.

Scrutiny Over Timing and Compliance

Financial disclosure reports revealed the problematic trades. They showed transactions in companies like Apple, Cava Group, and Caterpillar. These trades occurred between early 2024 and mid-2025.

Critically, some trades happened during Fed “blackout periods.” These are the weeks surrounding policy meetings when trading is banned. For example, a sale of Southwest Airlines stock occurred just before a key meeting in April 2024. This timing immediately raised red flags with ethics officials.

Official Response and Internal Review

The Office of Government Ethics (OGE) took direct action. It declined to certify Kugler’s financial disclosure filing. The matter was then formally referred to the Federal Reserve’s own Inspector General for a deeper review.

According to reports from Reuters, Kugler maintained the trades were made by her husband without her knowledge. She stated they were promptly reported and divested on the advice of ethics staff. Despite this, the compliance failure was deemed significant.

A Pattern of Past Problems

This is not the Fed’s first ethics controversy. In 2021, the central bank tightened its rules after a similar scandal. That earlier episode led to the resignations of two regional bank presidents.

The strengthened rules explicitly ban trading individual stocks. They also enforce a one-year holding period for other investments. The Kugler case tests the limits of these reforms, especially regarding spousal activity.

The Path to Resignation

By July 2025, the situation escalated. Kugler reportedly sought a waiver from Fed Chair Jerome Powell. She wanted permission to adjust her portfolio to comply with rules. Powell denied this request, according to sources familiar with the matter.

Kugler resigned from the Board of Governors shortly after. She has since returned to her academic position at Georgetown University. Her brief tenure leaves a mark on the institution’s ongoing struggle with ethics.

The recent Federal Reserve ethics probe reveals the fine line officials must walk. It highlights how personal finances can create major conflicts. The central bank’s credibility depends on strict adherence to its own rules.

Info at your fingertips

What is a Fed “blackout period” for trading?

It is a window before and after Federal Reserve policy meetings. Senior officials are prohibited from trading during this time. The rule prevents any appearance of profiting from non-public information.

Who conducted the stock trades in question?

The financial disclosures list the trades as being made by Adriana Kugler’s spouse, Ignacio Donoso. He is a practicing immigration attorney. Kugler stated she had no prior knowledge of the transactions.

What happened after the trades were discovered?

The Office of Government Ethics did not certify her disclosure. It referred the case to the Fed’s Inspector General for investigation. Kugler resigned from her post shortly thereafter.

How does this affect the Federal Reserve’s reputation?

It fuels ongoing criticism about ethics at the central bank. Public trust is essential for the Fed’s effectiveness. Each new scandal makes it harder to maintain that trust.

Did Adriana Kugler admit to wrongdoing?

No, she has not admitted to any intentional wrongdoing. Her statements indicate the trades were made by her spouse independently. She complied with the process of reporting and divesting them.