Collaboration 🔍

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Collaboration

The Federal Reserve said it is collaborating with the Office of Inspector General on an investigation of trades made last year by central bank employees to see if they were ethical and legal.

After a series of financial reports revealed that Vice Chair Richard Clarida, Dallas Fed President Robert Kaplan, and Boston Fed President Eric Rosengren all made sizable trades in 2020, the inclusion of the Inspector General’s office adds to the developing debacle at the Fed.

The trades, some of which were worth millions of dollars, attracted attention from Congress and raised concerns that central bank employees were trading on insider information as the Fed took unprecedented steps to help the US economy recover from the pandemic.

The public outcry and heightened scrutiny of Fed trading began in early September when it was revealed that many Fed employees had purchased and sold financial assets while working on emergency liquidity measures to help preserve the US economy.

According to the documents, Kaplan made numerous trades valued at $1 million or more in 2020. Rosengren traded real estate while working to acquire mortgage-backed securities with other Fed officials. Both Kaplan and Rosengren quit last week in the wake of the public outcry, but Rosengren claimed health problems as the reason for his early departure.

Are you for or against more regulations to prevent Fed officials from trading? Do you think Fed officials should be allowed to trade securities?

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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