Atlanta Fed President Discloses Trades ‘Inadvertently’ Made During Blackout Periods—Prompting Latest Fed Investigation


More than two years after the trading activity of Federal Reserve officials came under heavy scrutiny, Atlanta Fed President Raphael Bostic has come forth disclosing a series of transactions he made during periods in which officials were barred from trading—prompting the latest investigation into Fed officials’ trades.

Key Facts

In a statement Friday afternoon, the Atlanta Fed said its board of directors was “made aware” of inaccuracies in Bostic’s financial disclosure forms, transactions that took place during blackout periods and holdings he owned that violated guidelines set by the Fed’s market-governing committee; it announced the Fed’s Office of Inspector General is investigating the matter.

As part of the announcement, Bostic released a seven-page statement explaining the incidents, saying his accounts have been directed by “third parties” and that he was unaware when his account managers made a “limited number” of transactions during blackout periods coinciding with Fed announcements and periods of financial stress.

He further outlined a series of dozens of transactions from each year between 2017 and 2021, and said he worked with the Fed to provide corrected information “as soon as” he became aware of the discrepancies “in recent months.”

Additionally, Bostic says he “inadvertently” miscalculated income for some assets in retirement accounts and that he has divested in assets barred by new trading rules that went into effect in May.

The Atlanta Fed said Bostic “thoroughly corrected” the forms dating back to when he first took the position as president in 2017 and that its board has “confidence” in Bostic’s explanation that he did not seek to profit from any nonpublic Fed knowledge.

The disclosure comes a year after the Fed announced “tough new rules” governing the investments and trades made by central bank officials—including a ban on the purchase of individual securities and cryptocurrencies—following the high-profile resignations of two regional Fed presidents who faced scrutiny over their trading activity during the pandemic.

Key Background

Eric Rosengren and Robert Kaplan, the former presidents of the Federal Reserve Banks of Boston and Dallas, respectively, announced their retirements on the same day last year—just weeks after they came under scrutiny for trading individual stocks during the pandemic. While Rosengren cited health issues for his early retirement, Kaplan acknowledged the “recent focus” on his financial disclosures risked “becoming a distraction” for the Fed. Trades made by Federal Reserve Vice Chair Richard Clarida in February 2020 have also faced criticism. After the disclosures, Powell ordered a sweeping review of the rules governing Fed officials’ trades before coming up with the new trading rules that were implemented in May.

Crucial Quote

“I want to be clear: At no time did I knowingly authorize or complete a financial transaction based on nonpublic information or with any intent to conceal or sidestep my obligations of transparent and accountable reporting,” says Bostic.

Further Reading

Dallas Fed President Robert Kaplan Resigns Amid Scrutiny Over Trading—Hours After Boston Colleague Steps Down (Forbes)

Elizabeth Warren Calls On SEC To Investigate Fed Officials’ ‘Ethically Questionable’ Trades (Forbes)

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