The Federal Reserve Bank of Atlanta revealed on Friday that its chairman, Rafael Bostic, had violated the US central bank’s investment ethics rules.
Written by Elizabeth A. Smith, Atlanta’s chairwoman, said in a statement: “We became aware of transactions that occurred during the blackout periods and properties that violated guidelines set by the Federal Open Market Committee.”
“After reviewing the documents and discussing these issues with President Bostic and the Chief Ethics Officer at the Federal Reserve Bank of Atlanta, the Board of Directors acknowledged the violations and accepted President Bostick’s explanation,” the statement said. “My board colleagues and I are confident in President Bostic’s explanation that he did not seek to draw upon any relevant knowledge of the FOMC.”
The statement said Bostick has corrected his financial forms since he first joined the Atlanta Federal Reserve in 2017.
“We are satisfied with his revised financial disclosures and the changes he has made in managing his investments,” Smith wrote. “The Board is also satisfied that President Bostick has put in place procedures to ensure that there are no future abuses.”
Bostick said in a note that the irregularities were carried out by financial advisors. The memo was sent with financial disclosure forms dating back to 2017.
“Since taking office, I have ensured that my assets are held in managed accounts that neither I nor my personal investment advisor can direct,” Bostick wrote in the memo, according to Reuters.
He continued, “Because of my reliance on a third-party manager, I was unaware of any specific trades or their timing, including a limited number that occurred during the FOMC … blackouts or periods of financial stress.” “Likewise, I was unaware of the time when my holdings of US Treasury funds in 2021 exceeded the limits set out in the FOMC Trading and Investment Rules.”
“I have not at any time knowingly authorized or completed a financial transaction based on non-public information or with any intent to conceal or override my obligations to provide transparent and accountable reporting,” the memo reads.
Smith revealed that the Inspector General of the Federal Reserve System will review the matter.
“We welcome this review and will cooperate fully to ensure this matter is effectively resolved,” Smith wrote.
The revelation comes shortly after the new rules were implemented in response to other ethical issues with central bank officials. Last year, officials at the Federal Reserve banks in Boston and Dallas were forced to resign after financial disclosure forms showed they were trading inappropriately.