Atlanta Federal Reserve Bank President Raphael Bostic said Friday that many of his financial trades and investments in the past five years inadvertently violated the central bank's ethics rules, and he has revised all his financial disclosures since becoming president in 2017.
Bostic said the trades were made by investment managers that he did not directly oversee and he was unaware of the transactions. He said he has since changed his investment approach to remain within the rules.
Bostic's disclosure comes just a year after a trading controversy engulfed the Federal Reserve. Last fall, two bank presidents resigned after their frequent stock trading at the outset of the pandemic attracted criticism because it occurred at the same time the Fed was taking steps to stabilize financial markets and the economy.
Since then, investments by Fed officials have come under tight scrutiny, given that policymakers like Bostic participate in interest rate decisions by the Fed that can cause wild swings in financial markets.
Bostic said the managers had made financial transactions during periods surrounding Fed meetings, when members of the Federal Reserve's policymaking committee are not supposed to trade. The advisers also purchased investments in amounts above limits set by the Fed's ethics rules.
The board of the Atlanta Fed said it has accepted Bostic's explanations for the oversights and announced no further actions.
“My board colleagues and I have confidence in President Bostic’s explanation that he did not seek to profit from any (Fed)-related knowledge,” said Elizabeth Smith, chair of the Atlanta Fed Bank's board.
Still, Federal Reserve Chair Jerome Powell has asked the Fed's Office of Inspector General to review Bostic’s financial disclosures.
“We look forward to the results of their work and will accept and take appropriate actions based on their findings,” a Fed spokesperson said.
The Fed revised its ethics rules last fall to put tougher limits on investing by Fed officials and senior staff. Those rules took effect May 1. Officials are now largely restricted to owning only diversified mutual funds and have to provide 45 days' notice before making any trade.
Bostic said he has altered his current investments to conform with the updated ethical guidelines.
“I recognize it is my responsibility to understand and abide by every obligation of this office,” Bostic said in a statement. “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.”
