Another top Federal Reserve official revealed he violated central bank policy on financial transactions, leading Chair Jerome Powell to open a probe in the latest chapter of a broader Fed ethics scandal.

Atlanta Fed President Raphael Bostic said Friday that his asset managers made trades during restricted periods and transactions had been inadvertently omitted from his financial disclosures. The regional bank also posted the corrected disclosures -- going back to 2017, the year he became chief.

The development comes at a time when the central bank can ill afford distractions. It’s battling inflation at a 40-year high by aggressively raising interest rates while hoping to avoid a painful recession.

Bostic’s revelations reopen a damaging ethics scandal that erupted last year and led Powell to overhaul trading rules to support public confidence in the Fed, in an acknowledgment that the previous oversight lacked rigor.

Bostic said Friday he wasn’t aware of the specific trades or timing of the transactions, which were made by a third-party manager in accounts where he did not have ability to direct trades.

“I take very seriously my responsibility to be transparent about my financial transactions and to avoid any actual or perceived conflicts of interest,” Bostic, 56, said in the statement.

The Atlanta Fed’s board of directors expressed its support for Bostic. “My board colleagues and I have confidence in President Bostic’s explanation that he did not seek to profit from any FOMC-related knowledge,” board chair Elizabeth Smith said.



The ethics scandal’s earlier fallout saw two regional Fed presidents announce their early retirements following revelations about their unusual trading activity in 2020 as the central bank battled Covid-19, and placed Powell himself under scrutiny, alongside then-Vice Chair Richard Clarida. 

Bostic explained in a seven-page statement Friday that he misunderstood the trading restrictions, and he sought to avoid conflicts of interest by holding his assets in managed accounts that he could not direct.

He said that he had “come to learn, however, that while I did not have the ability to direct trades in these accounts, the transactions directed by third parties, not just the assets themselves, should have been listed on my annual financial disclosure forms.” That included what he said were a “limited number” of trades that took place during Federal Open Market Committee blackout periods or financial stress periods.

A Fed spokeswoman said Powell has asked the Board of Governors inspector general, the central bank’s internal watchdog, to review Bostic’s disclosures and “we look forward to the results of their work and will accept and take appropriate actions based on their findings.”

Comments from Fed Board ethics officials included in Bostic’s corrected 2021 financial disclosures noted that:

  • Bostic omitted a substantial number of securities transactions from the disclosures that he previously filed
  • He held more than US$50,000 of Treasury funds in violation of then-applicable Board policy
  • Bostic had extensive trading activity during FOMC trading blackout periods and during March-April 2020, which he explains was carried out by third-party financial advisors with investment discretion within managed account

Bostic said his assets are no longer in unified managed accounts and no “automatic” investments can occur without his approval. He also divested from assets that are no longer allowed under new trading rules that went into effect for senior Fed officials in May.



The Fed overhauled its ethics rules in 2021 after revelations about unusual trading activity during 2020 by several senior officials as the central bank slashed interest rates to nearly zero and unleashed emergency lending programs to protect the economy as the pandemic spread.

Then-Dallas Fed President Robert Kaplan and his Boston colleague Eric Rosengren both announced their early retirement following the revelations, with Rosengren citing ill health. Clarida also came under scrutiny for his transaction on the eve of a Fed statement signaling it was getting ready to calm market panic. He resigned Jan. 14, 2022, ahead of the expiration of his term as governor on Jan. 31.

Regional Fed presidents file annual financial disclosures, and it is now routine for those banks to make them publicly accessible.

The Fed IG has separately looked into transactions by Powell’s family trust and by Clarida, and closed the investigation in July saying it didn’t find evidence of wrongdoing. Probes of senior reserve bank officials are ongoing, the IG said at the time.

The IG’s probe has been criticized as incomplete by Senator Elizabeth Warren, a Massachusetts Democrat.