The trades drew scrutiny from lawmakers and ethics experts. The Fed heavily influences stock, real estate and interest-rate sensitive markets, and had an especially outsize role as markets gyrated at the onset of the coronavirus pandemic. While there is no clear evidence that they did, officials could have used the information they had as public policymakers to earn profits for themselves.
The Fed’s independent watchdog investigated each official’s trades, much as it will now investigate Mr. Bostic’s. It largely absolved the Fed vice chair, though the results of the other two investigations have yet to be released. Both of the Fed presidents in question — Robert Kaplan and Eric Rosengren — left their posts, and the vice chair, Richard Clarida, stepped down earlier than expected. Other explanations were given for some of those resignations. The central bank ushered in a new and much stricter set of stipulations that limit when, how and what central bankers can trade.
It is unclear whether Mr. Bostic’s transactions will draw a similar uproar. They did not include individual securities, but there were a number of trades in his portfolio in March and April 2020 — the period when the Fed was very active in markets.
Mr. Bostic’s retirement account bought small amounts various index funds on March 19, 2020, while asset prices were sagging as the pandemic took hold in the United States. On March 23, the Fed announced a wide-ranging market rescue. On March 24, Mr. Bostic’s account sold out of several other funds and bought into several more.
Many of the transactions — along with others on April 8, a day before the Fed again heavily intervened in markets — took place after the Fed Board had sent a letter on March 23 to regional central bank ethics offices warning officials to avoid unnecessary trading when the central bank was so active in markets.
It is not clear whether Mr. Bostic profited from the transactions, and according to his statement, he would have lacked any knowledge that they had occurred.
But his account might have benefited from trading during a period when the Fed fundamentally shifted the tone in markets. That underlines why the Fed has come under intense pressure to be more transparent about how its officials are managing their money.
It is also a key reason that Mr. Bostic’s reporting mistakes will face additional scrutiny.
Jerome H. Powell, the Fed chair, “has asked the Office of Inspector General for the Federal Reserve Board to initiate an independent review of President Bostic’s financial disclosures,” the Fed said in its statement. “We look forward to the results of their work and will accept and take appropriate actions based on their findings.”
