Federal Reserve officials have opened an investigation into the investments of its Atlanta branch’s top officer after he said his asset managers had conducted financial transactions on his behalf that violated the central bank’s ethics rules.
Federal Reserve Bank of Atlanta President and CEO Raphael Bostic said in a statement Friday that the trades were made by a third-party and that he was not aware of the trades or their timing, but he believed that they broke Fed rules and had issued an updated disclosure.
The transactions included some that took place during the “blackout periods” around the meetings of the Fed’s rate-setting committee.
“I take very seriously my responsibility to be transparent about my financial transactions and to avoid any actual or perceived conflicts of interest,” said Bostic, who was named to head the Atlanta branch of the central bank in 2017.
I have “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,” said the statement from Bostic.
Bostic said he worked the Fed attorneys and the Atlanta Fed’s board of directors to provide corrected information on an updated disclosure.
Elizabeth Smith, chair of the Atlanta Fed’s board, said board members have looked at the violations and Bostic’s explanation. “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 in a statement.
In his statement, Bostic said he had not had any “intent to conceal or sidestep my obligations of transparent and accountable reporting.”
Bostic said he moved to correct the mistakes “once I became aware of the deficiencies.”
Jerome Powell, the chairman of the Fed, said he had asked the Fed’s inspector general to look into Bostic’s transactions, according to a statement from the central bank.
Bostic’s corrected disclosure for 2021 asserts that he had omitted a number of securities transactions and that he had held more than $50,000 of Treasury funds in violation of then-applicable Board policy.
The revelations concerning Bostic come after the Fed revised its ethics rules in 2021 in response to a trading scandal.
In 2020, with the pandemic deepening and the economy in turmoil, there were reports of questionable trading activity by some top Fed officials. Two senior Fed officials announced early retirement.
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