Federal Reserve probing Bostic’s trading after blackout period transactions

President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Raphael W. Bostic speaks at a European Financial Forum event in Dublin, Ireland February 13, 2019.

Clodagh Kilcoyne | Reuters

The Federal Reserve is looking into trades that Raphael Bostic, the head of the central bank’s Atlanta district, made during restricted periods.

In the wake of disclosures that there were multiple incidents over the past several years in which Bostic’s investment activity violated Fed restrictions and blackout periods, the central bank said its Office of Inspector General would be reviewing the matter further. There also were incidents were Bostic incorrectly reported his assets.

“We welcome this review and will cooperate fully to ensure this matter is effectively resolved,” the Atlanta Fed said in a statement.

Trading by Fed officials over the past several years has been a hot-button issue. Disclosures that multiple officials had been involved in investment moves at a time when the Fed was taking steps to support markets preceded the early retirements of two regional presidents.

The controversy also led to a revised policy that severely restricts the moves Fed officials can make.

Bostic said that in his case the violations were not intentional and occurred because of his reliance on a third-party manager who was handling his investments. He said his investments are in accounts in which neither he nor his investment adviser can direct.

In a statement issued along with his amended disclosure forms, Bostic apologized for the controversy.

“I recognize it is my responsibility to understand and abide by every obligation of this office,” he said. “I want to be clear: at no time did I knowingly authorize or complete a financial transaction based on nonpublic information or with any intent to conceal or sidestep my obligations of transparent and accountable reporting.”

He also noted in the statement that his holdings of Treasurys in 2021 exceeded limits outlined in Fed guidelines. The Fed sets interest rates through the use of its fed funds rate, which generally have a close correlation with Treasury yields.

On top of previous regulations in place, the Fed in February added to restrictions on what its members can do. The new regulations prohibit top officials from holding individual stocks, bonds and cryptocurrencies, along with other assets.

This is breaking news. Please check back for updates.

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