5 Oct 2021
Fed’s Watchdog to Investigate Financial Trades by Top Officials
The Index Today
Fed Chair Jerome Powell asked for an internal examination of the central banks ethics rules last month. This step came after major revelations pointed towards unusual trading activity by senior bank officials. The Federal Reserve has stated that it plans to open an investigation to determine the revelations with its internal watchdog.
The fed released a statement on Monday, “As part of our comprehensive review, we began discussions last week with the Office of Inspector General for the Federal Reserve Board to initiate an independent review of whether trading activity by certain senior officials was in compliance with both the relevant ethics rules and the law. We welcome this review and will accept and take appropriate actions based on its findings.”
Fed Chair Jerome Powell told reporters that the comprehensive review will provide facts and enable the board to make changes and tighten the rules. Senator Patrick Toomey of Pennsylvania and member of the Senate Banking committee said that an investigation into the matter would “make sense.” He also stated, “It is important that the public have a very high level of confidence that senior Fed official is engaged in creating any kind of conflict of interest.”
Senator Elizabeth Warren has also asked to investigate the matter with the Securities and Exchange Commission to see if top Fed Reserve officials violated any laws. Financial information of Fed vice Chair Richard Clarida showed $1 to $5 million trading of bond fund into stock funds just a day before Powell’s speech.
A spokesperson speaking on Clarida’s behalf said that the trading reports released were a “pre-planned rebalancing to his accounts, similar to a rebalancing he did and reported in April 2019.”