Fed Implements Strict Trading Restrictions After Major Ethics Scandal

| Importance: 7/10 | Status: confirmed

The Federal Reserve announced comprehensive trading restrictions for senior officials following a major financial ethics scandal. In response to controversial trades by regional Fed bank presidents Robert Kaplan and Eric Rosengren during the Covid-19 pandemic, the Fed imposed strict new rules prohibiting senior officials from trading individual stocks, bonds, derivatives, and government-backed securities. Senator Elizabeth Warren called for an SEC investigation, arguing the trades potentially violated insider trading laws, particularly highlighting a trade by Vice Chair Richard Clarida just before a major policy statement. The new rules require pre-approval for all trades, mandate holding periods for investments, and aim to restore public confidence in the Federal Reserve’s leadership by preventing conflicts of interest.

Key Actors

Jerome Powell Federal Reserve Board Elizabeth Warren Richard Clarida Robert Kaplan Eric Rosengren

Tags

federal-reserve ethics-policy trading-restrictions jerome-powell regulatory-response elizabeth-warren institutional-accountability financial-ethics insider-trading

Sources (3)

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