Fed reviews ethics polices after prolific trading uncovered

WASHINGTON — The Federal Reserve is reviewing the ethics policies that govern the financial holdings and activities of its senior officials in the wake of recent disclosures that two regional Fed presidents engaged in extensive trading last year.

Robert Kaplan, president of the Dallas Federal Reserve Bank, in 2020 traded millions of dollars of stock in companies such as Apple, Amazon, and Google, while Eric Rosengren, president of the Boston Fed, traded in real estate investment trusts, according to financial disclosure forms. Both pledged last week to divest those holdings after they were reported by The Wall Street Journal.

Comments made by Fed presidents can move markets and they have a hand in creating U.S. monetary policy. Such high placed officials often have exclusive access to discussions about upcoming policy shifts that could benefit or be detrimental to some economic sectors, though they are prohibited from trading on that knowledge and are unable to trade in the period around Fed meetings.

In a prepared statement today, the Fed said that Chair Jerome Powell late last week requested a “fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials.”

The statement came after letters were sent Wednesday by Sen. Elizabeth Warren, a Democrat from Massachusetts, urging that the regional Fed banks ban the ownership and trading of individual stocks.