What You Need to Know
- The revelations start a new phase of an embarrassing and damaging Federal Reserve ethics scandal that erupted last year.
Federal Reserve Bank of Atlanta President Raphael Bostic said his asset managers made trades that broke central bank rules, leading Chair Jerome Powell to open a probe in the latest chapter of an broader Fed ethics scandal.
Bostic said in a statement Friday that he was not 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.
He detailed the transactions in corrected disclosure forms posted to the Atlanta Fed’s website.
“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, who has been president since 2017, said in the statement.
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 $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.
The Atlanta Fed’s board of directors acknowledged the violations and accepted Bostic’s explanation, chair Elizabeth Smith said in a statement. “My board colleagues and I have confidence in President Bostic’s explanation that he did not seek to profit from any FOMC-related knowledge,” she said.