Atlanta Fed President Raphael Bostic made 19 prohibited transactions on May 2, 2022 — one day before a Federal Open Market Committee meeting, according to financial disclosure forms released Thursday.
Investment managers acting on Bostic’s behalf executed nine sales and 10 purchases of exchange-traded funds on that day — each ranging from $1,001 to $50,000, the documents showed.
Federal Reserve officials are barred from making trades over the nearly two-week blackout period leading up to FOMC meetings.
Bostic said the trades occurred before he was aware the transactions — for his husband's retirement account — fell under the blackout rule.
"As I now understand, transactions in such accounts are not exempt from the reporting requirements and FOMC blackout period trading restrictions," Bostic wrote in a statement seen by American Banker and the Financial Times.
The transactions had already been reported to the Atlanta Fed, ethics officers at the Fed board, and the central bank’s inspector general, Bostic said. The IG is investigating, according to Bloomberg.
This is not the first time Bostic has run afoul of ethics rules on trading at the Fed. He said in October he improperly disclosed financial transactions dating back to 2017 because he misunderstood trading restrictions and wanted to avoid perceived conflict of interest by holding his assets in managed accounts he could not direct.
Bostic said much the same Thursday — that he and his spouse “held assets in managed accounts over which we had no discretion,” according to Bloomberg.
The Fed on Thursday released annual financial disclosures for its reserve bank presidents in an effort to show it’s complying with stricter guidelines on trading.
Under rules that went into effect in May 2022, the Fed prohibits board governors, regional presidents and senior staff from buying individual stocks, holding investments in individual bonds or agency-backed securities or entering into derivatives.
The rules cover only new investments, though. Holdings that originated before May 2022 or before affected staff members joined the Fed are exempt.
The policy update came weeks after financial disclosure forms in September 2021 revealed two regional Fed presidents, Robert Kaplan of Dallas and Eric Rosengren of Boston, traded stocks in 2020 while also helping to set monetary policy. They resigned within hours of one another.
But the scandal deepened when an amended disclosure in December 2021 revealed then-Fed Vice Chair Richard Clarida sold an exchange-traded fund as markets cratered in the run-up to the COVID-19 crisis, then re-bought that fund three days later. Clarida resigned the next month. An IG probe into Clarida’s disclosures — as well as those of Fed Chair Jerome Powell — cleared the two of wrongdoing.
Bostic on Thursday also disclosed flaws in his 2021 documents, which he discovered while filling out the 2022 paperwork. He disclosed that he wrote incorrect values for certain assets, omitted assets he owned and included assets he'd already sold, according to American Banker.
At its May 2022 meeting, the FOMC agreed to raise interest rates by half a percentage point. Bostic was not a voter.
